Shenzhen Stock Exchange

Shenzhen Stock Exchange trading involves one of two major stock exchanges operating independently in mainland China. It currently stands as the eighth largest stock exchange in the world by market capitalisation. This page will outline who owns the exchange, trading and listing rules of the Shenzhen Stock Exchange, its purpose and trading hours. We’ve also listed the best brokers for day trading the Shenzhen Stock Exchange.

What Is The Shenzhen Stock Exchange?

The Shenzhen Stock Exchange trading/ticker symbol is SZSE and it is a key exchange operating in China. The exchange provides access to domestic stocks, oversees securities trading opportunities and devises operational rules. Other functions include arranging securities listings, supervising members, regulating listed companies and managing market information.

Today, it is the world’s 8th largest stock exchange by market capitalization with over 2,700 companies listed. In July 2021, the market capitalization figure stood at $3.9 trillion. The exchange is a self-regulated legal entity operating under the guidance and supervision of the Chinese Securities Regulatory Commission (CSRC). The other, larger exchange operating across mainland China is the Shanghai Stock Exchange (SSE).

Shenzhen Stock Exchange Vs Shanghai Stock Exchange

Both the Shanghai Stock Exchange (SSE) & Shenzhen Stock Exchange trading centres were opened by the Chinese government in 1990 as a method to modernise China’s economy. The main difference between the two is the listed companies found within the entity search.

The SZSE is a much smaller exchange than the SSE. The Shenzhen Stock Exchange trading companies are more entrepreneurial, privately-owned businesses. These are often those within the technology or manufacturing industry, New Hope Liuhe, for example. Around 60% of companies listed on the SZSE are manufacturers vs 28% on the SSE. The Shanghai Stock Exchange hosts larger, state-owned organisations like those within the financial sector. These are companies mainly responsible for China’s economic growth.

Shenzhen Hong Kong Stock Connect

The Shenzhen Hong Kong Stock Connect is a cross-boundary investment network that links the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. The programme, developed in 2016, allows traders to invest shares in the other market via local brokerages. The stock connect simply creates a single ‘China’ stock market that ranks as one of the largest in the world by daily turnover.

History

The Shenzhen Stock Exchange trading centre was established on 1st December 1990. The ownership directive is led by the Chinese Securities Regulatory Commission and operates from an impressive OMA building with an address in the Futian District location. By 2004, the exchange had eight listed companies, with new listings required to be small to medium-sized enterprises only.

Shanghai And Shenzhen Stock Exchange Difference

Key milestone history dates include:

  • 1991 – A computer-assisted Shenzhen Stock Exchange trading system was integrated into the operation – providing transaction processing, display of quotes and clearing functionality. The exchange launched its first index in April with a base of 100 points.
  • 1992 – Implemented a shift from manual bidding to automatic matching. Stock quotes were transmitted by satellite, a breakthrough in China communication technology. The exchange, alongside the CSRC, signed a memorandum of regulatory cooperation.
  • 1996 – Shenzhen Stock Exchange earned members status of the IOSCO.
  • 1997 – A fully electronic Shenzhen Stock Exchange trading board was implemented.
  • 2002 – Membership status to the World Federation of Exchanges (WFE) was granted.
  • 2004 – Launch of the SME board.
  • 2005 – Joint venture between Shanghai Stock Exchange and Shenzhen Stock Exchange was established, known as the China Securities Index Co.
  • 2009 – The exchange teamed up with leading global index provider Standard & Poors. Together, the organisations developed indices and other products for global investors in the Chinese market.

The Shenzhen Stock Exchange trading centre signed a memorandum of understanding with 50 major global stock exchanges and financial establishments. Other notable disclosure memberships of the platform include; the World Federation of Exchanges (WFE), the Asian and Oceanian Stock Exchanges Federation (AOSEF) and affiliate membership to the International Organisation of Securities Commissions (IOSCO).

What Is The Shenzhen Stock Exchange Used For?

According to the Shenzhen Stock Exchange official website, the SZSE is ‘committed to developing China’s multi-tiered capital market system, serving national economic development and transformation, and supporting the strategy of independent innovation’. As many significant national corporations are featured on the Shenzhen Stock Exchange trading lists, it can also provide a gauge of economic health or act as a reflection of major financial events.

The exchange is well known for being used as a trading platform by individuals across the globe who attempt to make a profit from company share price fluctuations. Traders can invest in company stocks, ‘short selling’ or ‘going long’ depending on market sentiment trends. Simply look out for the logo on investment platforms.

How Shenzhen Stock Exchange Trading Works

Indices

The main Shenzhen Stock Exchange trading index list is the SZSE Composite Index (SZCOMP). This contains only companies listed on the exchange, including Oriental Energy, ZTE Corporation, Anker Innovations and BYD Company. It is a market-cap weighted index that tracks the stock performance of all A-share and B-share corporations on the exchange.

Other related indices include:

  • SZSE Component Index – Widely accepted as a comprehensive benchmark of equities. Measures the performance of the 500 largest A-share stocks.
  • ChiNext Index – A unique, free float index comprising the 100 most liquid A-share stocks listed on the ChiNext market of the SZSE. It comprises those organisations in emerging and innovative industries.
  • SZSE 100 Index – A free-float capitalisation weighted index comprising the largest and most liquid A-share stocks trading on the exchange. The Bank of Ningbo currently sits under the SZSE 100 index of the Shenzhen Stock Exchange.

Boards

There are three Shenzhen Stock Exchange trading boards: the mainboard, the small and medium enterprises (SME) board and the ChiNext Market. These all support China’s capital market system.

The mainboard originated in 1986 and is a vital channel to finance major enterprises. The mainboard plays an active role in endorsing a modern enterprise structure, contributing to economic growth and optimising resources. The mainboard has seen the continuous expansion of capacity to serve the economy in real-time.

The SME board was recognised in 2004 and has grown to be the largest of the three sub-markets hosted on the Shenzhen Stock Exchange. Many of the companies listed on this platform are manufacturing corporations with stable performance prospectuses.

The ChiNext Market is the newest board, established in 2009. The rules of the board focus on innovative growth companies and start-ups with lower average daily turnover revenues vs those on the SME board.

In April 2021, the CSRC approved the merger of the Shenzhen Stock Exchange trading centre’s main board and the small and medium enterprises (SME) board. The plan was developed due to the overlapping issues between business scopes across both boards. The securities category of the formerly listed companies on the SME board will merge and be changed to ‘A Shares’ on the mainboard.

Shenzhen Stock Exchange Trading Index Historical Data

Blockchain

In October 2020, it was published that the Shenzhen Stock Exchange trading centre is set to develop a blockchain-based platform for private companies that fail to be listed on the main exchange board. This is a move hosted by the China Securities Regulatory Commission and marked an important milestone towards boosting the innovation of financial technology. The SZSE hosts an application to further facilitate the digitisation of the equity market.

Trading Rules

There are several listing requirements that companies must adhere to before being considered for the SZSExchange. The main Shenzhen Stock Exchange trading rules include:

  • Accurate historical financial filings, annual report published and correct data sharing.
  • Positive net profit in the past three years with an aggregate amount exceeding RMB 30 million.
  • Total share capital before the IPO is not less than RMB 30 million with intangible assets not exceeding 20% of net assets.
  • The company must have been in operation for a continuous period of over three years, established as a company limited by shares.

How To Start Day Trading On The Shenzhen Stock Exchange

Once you are ready to start investing in the exchange, there are a few considerations:

Choose A Broker

Financial brokers act as an intermediary platform so you can access Shenzhen Stock Exchange trading services. Choosing the right one to meet your trading needs is vital. Consider the integration of tools such as historical data charts, customisable index graph options, market sentiment data and access to live news and press release information.

Fees will also be a key consideration in your broker selection. Look for those brokers with a transparent and competitive commission stricture on your chosen order types. Other things to review include customer service options, access to a mobile app to trade on the go, regulatory authority and minimum deposit requirements.

Strategy

It is worth carefully considering which Shenzhen Stock Exchange trading strategy you will use to turn a profit. The best approach is to analyse previous market data facts, charts and patterns. Using this information will help you better predict future price movements, thus creating a base strategy. There are many pre-existing strategies and indicators online that you can use for inspiration or implement in your own trades.

Choose A Stock

The most difficult decision is ascertaining the best day trading stocks to invest in on the Shenzhen Stock Exchange trading centre. With the ever-growing company search list, which will provide the best profit potential? Do you stick to those with recent IPO hypes?

There are two main ways to analyse stocks; volume and volatility. Spend the time analysing price shifts and average trading volumes across the past four weeks, for example. Volume gives weight to market moves. The greater the volume, the greater the move. Expanding your search out of the top 20+ stocks that your broker may offer could make a significant difference to your profit potential. Live index trackers and screeners will be invaluable when looking into the exchange.

The level of unpredictability surrounding stocks can influence significant price fluctuations within a trading session. Stocks with low volatility generally offer less profit potential. There are several ways to try and calculate the volatility of stock including standard deviation, or Beta, which refers to the fluctuations of returns against a relevant benchmark.

Shenzhen Stock Exchange Trading Hours

The SZSE trading hours are:

  • Pre-Trading Session – 09:15 to 09:25 CST
  • Morning Session – 09:30 to 11:30 CST
  • Afternoon Session – 13:00 to 14:57 CST
  • Closing Call Auction – 14:57 to 15:00 CST

The stock market opening hours operate in the Asian time zone, GMT +8. Note there are no weekend trading days available; the SZSE market is open Monday to Friday only. The stock exchange is open for just under 4 hours, a notably shorter period vs other markets. A shorter trading session compresses activity leading to increased liquidity, smaller spreads and sometimes less volatility.

Keep an eye on public holiday dates as Shenzhen Stock Exchange trading will not be available during national holidays. Many brokers will integrate a holiday trading calendar into personal account portals.

Biggest Players

In July 2021, there were 2743 companies listed on the Shenzhen Stock Exchange with 67% of these belonging to the manufacturing industry. The number of listed companies in this sector had a combined market value of 23 trillion yuan. Some of the largest listed companies by market capitalization include:

  • Ping An Bank
  • Midea Group
  • China Vanke Co
  • Wuliangye Yibin
  • Gree Electric Appliances
  • Hangzhou Hikvision Digital Technology

These Shenzhen Stock Exchange trading companies hold massive market cap numbers with financial statements reaching into the billions. There is no ‘best stock to trade’ but the above can offer strong liquidity and volatility. Keep an eye on company announcements, news and filings, as these can quickly swing price movements.

Why Trade The Shenzhen Stock Exchange

  • Products – Various products can be accessed, including mutual funds, indices, a-shares and derivative financial products.
  • Volatility – As the Shenzhen Stock Exchange trading centre consists of major manufacturing and technology companies, it creates an opportunity to access significant price fluctuations.
  • Simple – Investing in the stock market is not too complex, even for the newest traders. You can buy and sell shares at any time and as often as desired.
  • ESG Focus – The Shenzhen Stock Exchange trading centre has pledged guidelines for listed corporations to comply with industry-standard ESG disclosures. This includes training courses for senior management to support socially responsible investing practices for all traders.
  • Regulation – Although self-regulated, the exchange operations are overseen by the Chinese Securities Regulatory Commission (CSRC). Many of the companies listed on the platform are subsidiaries of companies over which the Chinese government maintains high levels of control, which may produce additional funds and scam protection.

Shenzhen Stock Exchange - News & Filings

Shenzhen Stock Exchange Trading For Foreign Investors

Purchasing shares of publicly traded companies in China is not as simple as for alternative exchanges like in the US. China imposes strict restrictions on the individuals who can purchase stocks and all public trading companies will fall under share categories. The Shenzhen Stock Exchange has a foreign ownership holdings limit of 30%, with some companies nearing their owner limit as reported in 2020. SZSE reserves the right to block investment trade for these companies from overseas buyers.

A-Shares

Defined as publicly listed Chinese corporations that trade on exchanges such as the Shenzhen Stock Exchange. These trade in renminbi (CNY) and are generally only available for trading to mainland China residents. Foreign investment in these companies is occasionally supported through a regulated arrangement such as via the Qualified Institutional Investors (QFII) programme. Other methods for international investors to access A-Shares on the Shenzhen Stock Exchange includes alternative opportunities like exchange-traded index funds (ETFs).

B-Shares

B-Shares are domestically listed foreign investment shares. These trade in foreign currency such as the US Dollar and can be found on the Shenzhen Stock Exchange trading centre. These shares are more widely available to foreign investors. Note that settlement cycle timings may vary for overseas traders.

Tips For Shenzhen Stock Exchange Trading

There are many ways to increase the potential of your day trading strategy. Our top tips for trading the stock exchange include:

Educational Resources

Access to comprehensive resources is invaluable, whether you are a new or experienced trader. There is plenty of availability of peer-to-peer or published resources to set you up on your way for a successful Shenzhen Stock Exchange trading journey. Online platforms and websites include Reuters or TradingView.

Books and journals can also be useful. Topics are vast with themes such as the Growth Enterprise Market (gem board), how to buy shares, the Shenzhen Stock Exchange trading fact book or details on blockchain board implementation. Other helpful resources include accessing a full trading calendar with public holidays, company annual report publications such as market cap 2018 to 2020 filings or PE ratio rationale.

It is also worth researching the specific asset types and trading methods that can be accessed in the index chart. This includes bond trading, futures, and B-shares.

Demo Accounts

Today is it standard practice for the most established global brokers to offer paper trading accounts. Demo platforms allow investors to practice trading in simulated environments without having to deposit personal capital. These accounts are a great way to get a feel for the exchange and trial strategies risk-free. Remember, price quote data may not be as accurate as demonstrated within a live account.

Final Word On Shenzhen Stock Exchange Trading

Shenzhen Stock Exchange trading offers access to some of the most influential companies in Asia. It is no surprise that international day traders across the globe output a significant interest and trading volume investing in this market. However, you must do your research. Understand historical price movements, economic influences and trading hours before you start your journey. Choosing the right broker can also help you get the most out of your trading strategy, see our list of the best TWSE brokers here.

FAQs

Who Owns The Shenzhen Stock Exchange?

The China Securities Regulatory Commission (CSRC) supervises the services of the SZSE. It is one of two stock exchanges operating independently in mainland China, the other being the Shanghai Stock Exchange.

Where Is The Shenzhen Stock Exchange Located?

The stock exchange is located in the Futian District of Shenzhen, a city in southeastern China.

What Is The Difference Between The Shanghai Stock Exchange (SSE) Vs Shenzhen Stock Exchange (SZSE)?

The main difference between the Shenzhen Stock Exchange trading centre and SSE is the types of companies that are hosted on each exchange. Smaller, emerging companies trade on the SZSE, whereas larger, state-owned corporations like banks can be found on the SSE. Both exchanges were founded in 1990 by the Chinese government.

Is The SZSE Regulated?

The Shenzhen Stock Exchange (SZSE) is a self-regulated legal entity under the supervision of the China Securities Regulatory Commission (CSRC).

How Many Companies Are Listed On The Shenzhen Stock Exchange?

The Shenzhen Stock Exchange trading centre is the 8th largest stock exchange in the world by market capitalisation, with over 2700 listed companies. In July 2021, this market capitalization figure stood at $3.9 trillion.

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