Introduction to Shenzhen Stock Exchange (Series 3) December 5, 2016
The ChiNext Market was launched by the government under the Shenzhen Stock Exchange in 23 Oct 2009. The difference between ChiNext and the main board lies in their mechanisms of financing, investment and risk management for issuers at various stages of development, rather than simply the sizes. Fully independent from the main board market, ChiNext takes into consideration the actual situation of China’s economy and capital market in its institutional design.
The ChiNext market is also known as Growth Enterprises Market Board (GEM) is a NASDAQ-style board of the Shenzhen Stock Exchange. It has developed rapidly since its inception in Sep 2009, as of 30 Sep 2016 the total number of listed companies measure 540 as compared to 28 in Sep 2009. The total market capitalization is CNY $5,234 Billion (approximately US $788 Billion) and total trading value is CNY $48.1 billion (Approximately US 7.25 billion).Average P/E is ratio 75.71.
Source: Shenzhen Stock Exchange
The ChiNext Price index comprises of 100 stocks, manufacturing stock and IT stock comprises of 46 and 39 stocks respectively. The purpose of the ChiNext Price Index objectively reflect the overall price movement and trend of the GEM stocks and provide investors with an authoritative reference index.
Guangdong Wen Foodstuffs Group (300498) is part of the Forbes Global 2000 lists and is a constituent of the ChiNext Price Index. The Company produces meat products, offer bio-pharmacy and food processing services. It has a market cap of around CNY $156 Billion.
EastMoney Information (300059) is also part of the Forbes Global 2000 lists and is a constituent of the ChiNext Price Index. East Money Information is engaged in the provision of financial information and advertising services. It has a market cap of around CNY $68 Billion.
Leshi Internet information (300104) formerly known as LETV is a constituent of the Chinext Price index. It is one of the largest online video companies in china. The Company provide network infrastructure services and services for video platform. It has a market capitalisation of close to CNY $88 Billion.
The ChiNext market will be only opened to institutional professional Investors in the initial phase however we should see a surge in volumes when it is open up to retail investors seeking to find values in GEM stocks.
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About the author
Shengyu Xu
Senior Dealer
Global Markets Department
Xu Shengyu graduated from the National University of Singapore with a master degree in Chemistry and joined Phillip Securities since 2011. He is currently a Senior Dealer in the Global Markets department. Shengyu is proficient in stock trading using both technical and fundamental analysis and frequently conducts educational seminars such as Market Outlooks, “Why Invest Globally” and trading platform introductions to enable his clients to make informed decisions in their investment. Shengyu specialises in China and Hong Kong markets.
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