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The Shenzhen Stock Exchange (SZSE): Definition, Operations, and Market Impact

Last updated 03/15/2024 by

Abi Bus

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The Shenzhen Stock Exchange (SZSE) is a major stock exchange in mainland China, operating alongside the Shanghai Stock Exchange (SSE). Established in 1990, it has grown to become the world’s eighth-largest stock exchange by market capitalization, with a focus on smaller and emerging-sector companies. The SZSE supports China’s multi-tiered capital market system and serves as a platform for various financial products and innovative growth companies.

What is shenzhen stock exchange (SZSE)? example & how it’s used

The Shenzhen Stock Exchange (SZSE) is a key player in China’s financial landscape, serving as one of the main stock exchanges alongside the Shanghai Stock Exchange (SSE). Let’s delve into what the SZSE is, how it operates, and its significance in the global economy.

Understanding the shenzhen stock exchange (SZSE)

The Shenzhen Stock Exchange (SZSE) was established on December 1, 1990, in Shenzhen, a modern city in southeastern China. Located in the Futian District, its iconic skyscraper building stands as a symbol of the country’s burgeoning financial sector. With a market capitalization of $3.90 trillion as of July 2021, the SZSE ranks as the world’s eighth-largest stock exchange.

Key functions and operations

The SZSE operates for four hours a day, five days a week, hosting trading sessions from 9:15 a.m. to 11:30 a.m. and 1 p.m. to 3 p.m. Its diverse array of products includes A-shares, B-shares, indices, mutual funds, fixed income products, and derivative financial products. Notably, many listed companies are subsidiaries of firms with significant government ownership.

The three boards of the SZSE

The SZSE comprises three boards: the Main Board, the SME Board, and the ChiNext Market. The SME Board, established in May 2004, caters to stable, well-defined businesses, particularly in the manufacturing sector. Meanwhile, the ChiNext Market, inaugurated in October 2009, focuses on nurturing innovative growth companies and startups, spanning various sectors such as technology and management.

International affiliations

The exchange has forged international ties, signing memorandums of understanding with 50 major stock exchanges and financial institutions worldwide. It holds memberships in prominent bodies like the World Federation of Exchanges (WFE) and the Asian and Oceanian Stock Exchanges Federation (AOSEF), underscoring its global reach and influence.

The shenzhen stock exchange versus the shanghai stock exchange

While the SZSE caters to smaller and emerging-sector companies, the Shanghai Stock Exchange (SSE) predominantly hosts larger, state-owned enterprises like banks and energy firms. Individual investors form the majority on the SZSE, whereas financial institutions dominate trading on the SSE. Both exchanges, established in 1990, reflect China’s economic modernization efforts and its opening to foreign investment.
Here is a list of the benefits and the drawbacks to consider.
  • Platform for smaller and emerging-sector companies
  • Diverse array of financial products
  • Nurtures innovative growth companies
  • Exposure to state intervention due to government-owned firms
  • Volatile market conditions

Frequently asked questions

What is the significance of the Shenzhen Stock Exchange?

The SZSE plays a crucial role in China’s financial system, providing a platform for smaller companies and fostering innovation in various sectors.

How does the SZSE differ from the SSE?

While both exchanges are vital to China’s economy, the SZSE focuses on smaller enterprises and individual investors, whereas the SSE hosts larger, state-owned firms and institutional investors.

What are the trading hours of the Shenzhen Stock Exchange?

The SZSE operates from Monday to Friday, with trading sessions from 9:15 a.m. to 11:30 a.m. and 1 p.m. to 3 p.m.

How does the SZSE contribute to China’s economic growth?

By providing a platform for smaller companies and startups, the SZSE encourages innovation and entrepreneurship, driving economic expansion.

What are the risks associated with investing in the SZSE?

Investing in the SZSE carries risks such as market volatility, exposure to state intervention, and regulatory uncertainties.

Key takeaways

  • The Shenzhen Stock Exchange (SZSE) is a major stock exchange in China, established in 1990.
  • It ranks as the world’s eighth-largest stock exchange by market capitalization.
  • The SZSE supports smaller and emerging-sector companies and offers a diverse range of financial products.
  • With international affiliations, the SZSE plays a significant role in the global financial landscape.

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