Economics Project Abstract
CULTURES OF CHINESE STOCK EXCHANGES: SHANGHAI, SHENZHEN, AND HONG KONG
Presenters:
Zheyan Chen, Illinois Mathematics and Science Academy, 1500 West Sullivan Road, Aurora, IL, 60506; jennyc@imsa.edu
Ying Shi, Illinois Mathematics and Science Academy, 1500 West Sullivan Road, Aurora, IL, 60506; yihi852@imsa.edu
Advisor:
Mr. Michael DeHaven, Illinois Mathematics and Science Academy, 1500 West Sullivan Road, History / Social Science, Aurora, IL, 60506; 630-907-5889/5960; dehaven@imsa.edu
Abstract:
The Shanghai and Shenzhen stock exchanges were established in the early 1990s by the People's Republic of China, whereas the Hong Kong Exchange and Clearing Limited has been under the tutelage of the British government since 1914. Now, the challenge for the government is to facilitate a smooth incorporation of the latter hub into China's economic system. Chinese stock markets were created to support state owned enterprises and promote quick market growth. The Chinese government is both the political principal that decides market policy and the economic principal that has the responsibility to cultivate state owned enterprises. There are constant temptations to sacrifice long term market integrity and consistent regulatory standards for short term rises in the asset values of these corporations. The listed houses in Shanghai are primarily large industrial businesses, while the Shenzhen exchange is dominated mainly by manufacturing and exporting companies. Shanghai can be seen as an indicator of the country's domestic economic well-being, while Shenzhen can be seen as an indicator of her manufacturing and trading health. Of the seven types of shares that can be traded in Chinese markets, only four are open to foreigners. Our inquiry also addresses the question of why Chinese stocks are attractive to outside investors.