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The Stock Market in China: Problems and Prospects for Domestic and Foreign Investment

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  • Lan Yisheng

Abstract

The stock market reappeared in Mainland China in the late 1980s and since then has experienced a rapid growth. Listed companies increased from one dozen in early 1991 to over 600 in mid 1997. The market capitalisation increased from less than 10 billion to over 1300 billion renminbi yuan in the same period. The market has some unique features like different shares issued to state, enterprise, individual share holders; different purchasing costs and circulation regulation for these shares; and strictly segmented markets for domestic investors and foreign investors. High P/E ratios, high system risks and high transfer rates have also been the special features of this market. The Chinese government has formulated the four principles of stock market development, i.e., the legal system, supervision, self-discipline, and standardisation in order to normalize its stock market. This paper comments on these developments and examines recent policy changes.

Suggested Citation

  • Lan Yisheng, 1997. "The Stock Market in China: Problems and Prospects for Domestic and Foreign Investment," Chinese Economies Research Centre (CERC) Working Papers 1997-07, University of Adelaide, Chinese Economies Research Centre.
    • Handle: RePEc:adl:cercwp:1997-07
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    File URL: https://media.adelaide.edu.au/economics/papers/cerc/cercwp1997-07.pdf
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    Cited by:

    1. Xiangmei Fan & Yanrui Wu & Nicolaas Groenewold, 2003. "The Chinese Stock Market: Development and Prospects," Economics Discussion / Working Papers 03-04, The University of Western Australia, Department of Economics.
    2. Girardin, Eric & Liu, Zhenya, 2005. "Bank credit and seasonal anomalies in China's stock markets," China Economic Review, Elsevier, vol. 16(4), pages 465-483.
    3. Eric Girardin & Zhenya Liu, 2003. "The Chinese Stock Market: A Casino with 'Buffer Zones'?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(1), pages 57-70.

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