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China's Stock Market - Part I

There are also various Chinese companies listed on exchanges in New York (sometimes called N-shares), Singapore and London, which might be classified as "Chinaplays." In addition, 'red chips' are companies that are incorporated in Hong Kong (or various offshore locations worldwide) but whose parent company is incorporated on the mainland and therefore derive a significant portion of their earnings from China. The total market capitalization fo these companies is around US$110 billion.

In May 2004, China's State Council approved the Shenzhen Stock Exchange's request to launch a secondary trading board, a Small & Medium Enterprises Board (SME Board), to focus on the smaller, typically privately owned companies. Shenzhen's attempt to outdo the GEM board in Hong Kong or even the NASDAQ in New York faces two major challenges: ensureing proper, transparent supervision to reassure investors, and listing quality companies with a sound financial history. The underlying potential is there: now it is a matter of working in earnest to create a board through which China's new entrepreneurial class can raise capital for the next level of growth.

                                                                                                                                           To view Part II

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