Shenzhen Stock Exchange (SZSE): What it Means, How it Works

What Is Shenzhen Stock Exchange (SZSE)?

The Shenzhen Stock Exchange (SZSE) is one of two main stock exchanges operating independently in mainland China. The other exchange is the Shanghai Stock Exchange (SSE). The Shenzhen Stock Exchange (SZSE) is a self-regulated legal entity under the supervision of the China Securities Regulatory Commission (CSRC). The main functions of the Shenzhen Stock Exchange (SZSE) are to oversee securities trading, provide the facilities for securities trading, and devise operational rules.

Understanding the Shenzhen Stock Exchange (SZSE)

The Shenzhen Stock Exchange (SZSE) was established on Dec. 1, 1990. It is located in Shenzhen, a modern city in southeastern China. The skyscraper building where the Shenzhen Stock Exchange (SZSE) is located is in the Futian District. Its construction was started in 2008 and finished in 2013. The building is 806 feet tall and has 49 floors.

The Shenzhen Stock Exchange (SZSE) is the world's eighth-largest stock exchange by market capitalization, with a market capitalization of $3.90 trillion in July 2021. It has trading sessions four hours a day and five days a week, Monday through Friday from 9:15 a.m. to 11:30 a.m. and 1 p.m. to 3 p.m. Its products include A-shares, B-shares, indices, mutual funds, fixed income products, and diversified derivative financial products. Many of the companies listed on the exchange are subsidiaries of companies in which the Chinese government maintains a high level of control.

The Shenzhen Stock Exchange (SZSE) supports China’s multi-tiered capital market system with three boards: the Main Board, the SME Board, and the ChiNext Market. The SME Board was established in May 2004 to serve companies with well-defined businesses that are stable in profitability. Many of the enterprises on this board are manufacturing companies. As a result, the SME Board is considered a barometer of the country’s manufacturing sector.

The ChiNext Market, established in October 2009, open to companies of all sizes that meet the listing criteria, but it focuses on innovative growth companies and startups. These areas of innovation include technology, management, and business models.

The Shenzhen Stock Exchange (SZSE) has signed a memorandum of understanding

(MOU) with 50 major stock exchanges and financial institutions across the world. It is a member of the World Federation of Exchanges (WFE) and the Asian and Oceanian Stock Exchanges Federation (AOSEF), and an affiliate member of the International Organization of Securities Commissions (IOSCO).

The Shenzhen Stock Exchange Versus the Shanghai Stock Exchange

Smaller and emerging-sector companies trade on the Shenzhen Stock Exchange (SZSE), and individual investors make up the majority of investors on the exchange. Larger, state-owned companies, such as banks and energy firms, often trade on the Shanghai Stock Exchange (SSE), and the majority of investors who trade on this exchange are financial institutions, such as banks and pension funds. Both exchanges were launched in 1990 in an effort by the Chinese government to modernize the Chinese economy by opening it up to foreign investors.