A: China's stock market "experiment" started 11 years ago when the first stock market was set up in Shenzhen in 1989. In 1993, a second stock market was set up in Shanghai. Since 1994, many Chinese companies have also been listed in Hong Kong as "H" shares. Some of them have also been listed in New York and Singapore.

Q: How do the two exchanges operate?

A: The Shanghai Stock Exchange (SSE) was founded on November 26th, 1990 and in operation on December 19th the same year. It is a non-profit-making membership institution directly governed by the China Securities Regulatory Commission(CSRC).

The SSE bases its development on the principle of "legislation, supervision, self-regulation and standardization" to create a transparent, open, safe and efficient marketplace.

The SSE endeavors to realize a variety of functions: providing marketplace and facilities for the securities trading; formulating business rules; accepting and arranging listings; organizing and monitoring securities trading; regulating members and listed companies; managing and disseminating market information.

After several years' operation, the SSE has become the most preeminent stock market in Mainland China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value. December 2004 ended with over 37.87 million investors and 837 listed companies. The total market capitalization of SSE hit RMB 2.6 trillion. In 2004, Capital raised from SSE market surpassed RMB 45.7 billion. A large number of companies from key industries, infrastructure and high-tech sectors have not only raised capital, but also improved their operation mechanism through listing on Shanghai stock market.

The Shenzhen Stock Exchange (the SSE) is a mutualized organization that provides a venue for securities trading under the authorization of the China Securities Regulatory Commission (the CSRC).

A broad spectrum of market participants, including 500 plus listed companies, 35 million institutional and individual investors and 200 or so exchange members, create the market. Here buying and selling orders are matched, in a fair, open and orderly market, through an automated system to create the best possible prices based on price-time priority.

The SSE is characteristic of the entrepreneurial spirit of the southern coastal city where it locates. Since its inception on 1st December 1990, it has blossomed into a market with great competitive edges in the country. Over the past 14 years, capital raised here amounted to an equivalence of US$ 807 million trade on the SSE. In June 2004, the Small & Medium Enterprises Board took off. This market, exclusive for small and mid-caps, is a significant step toward phase-in launch of the New Market. Under the principle of "Regulation, Innovation, Cultivation and Services", the SSE is committed to pursuit of a multi-layer capital market and making the SME Board home and engine for growth companies.

Q: What is the watchdog of the stock market?

A: To strength the centralized and unified management of the Chinese stock market, the Securities Committee of the State Council and the China Securities Regulatory Commission (CSRC) were formed in 1992. Among CSRC's responsibilities include: formulating policies, laws and regulations concerning securities and futures markets; overseeing issuing, trading, custody and settlement of equity shares, bonds, investment funds; supervising listing, trading and settlement of futures contracts, futures exchanges, securities and futures firms.

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