ABSTRACT
There has been remarkable, if uneven, development of China’s stock markets in the past 10 years. After years of intense debate, the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE) were officially established in 1990 and 1991 respectively, and in a surge of reform in 1992, the government approved a ‘bolder’ plan to experiment with the shareholding system in state-owned enterprises (SOEs). By the end of 1996, the number of shareholding companies at, or above, the county level exceeded 8,000, although the shares of most of these companies were non-transferable1 market capitalisation at the end of 1997 reached 1,753 billion yuan, up from 105 billion yuan at the end of 1992 (Ma, 2000, p. 74). Value traded in the market grew from 68 billion yuan in 1992 to 4,600 billion yuan in 2000. From 1991 to 2000, the number of listed companies increased from 14 to 1,160 while the number of individual stock investors exceeded 50 million by the end of 2000.2
By December 2000, the SHSE and SZSE had made public offerings totalling 340 billion yuan shares, of which 120 billion yuan were transferable, and listed companies had collected a total of 483.4 billion yuan from the stock market. In just 10 years the two markets provided 150 billion yuan revenue to the government and generated fees of 120 billion yuan. In total, the government collected 770 billion yuan funds from its two stock markets in the 1990s, an amount equal to three times the state fiscal revenue in 1990 and equivalent to 38 times the funds generated by issuing government bonds. Yet the question remains: while the government was obviously a big winner, did the publicly listed companies achieve their desired objectives and did general investors get satisfactory rewards?
