By IFCMarkets.com
During recent years huge changes occurred in China’s financial industry. In fact, the step by step opening up of the financial markets made Chinese stock market one of the world’s most active markets. When referring to Chinese stock market, it is worth to mention the stock markets in the mainland China and the stock markets in the Honk Kong, which is also a part of the overall China market. Actually,enormous is the right word to describe the Chinese stock market, as the trading volume on the Chinese stock market is 4 times bigger than on the New York Stock Exchange. Chinese stock market can be characterized by great volatility, small retail investors and is controlledby the government.This article aims to provide investors with basic information about the Chinese stocks, which are highly popular nowadays.
The brief history of Chinese Stock markets
The history of Chinese stock market dates back to the period when the Qing Dynastyruled in the country (130 years ago). During this period of timethe Shanghai Stock Exchange was first opened up in 1869. Afterwards, the Beijing Securities Exchange was established in 1918. As a matter of fact, in 1949 the Chinese stock market disappeared for about 30 years, becausestock market wasconsidered to be a place of speculation and the latter was forbidden by the People’s Republic of China. It was only in 1978, when China’s government made efforts to open up the country’s economy to the rest of the world, which resulted insignificant changes in China’s financial system and also led to the formal establishment of the Chinese stock market.
The connection between the country’s economy and the stock market
It should be noted that there is a great difference between China’s stock market and the stock markets of the USA and the western countries, because the connection between China’s stock market and the economy isn’t tight, which means that the economy isn’t greatly affected by the ups and downs taking place in the stock market. For this reason Chinese stock market is hardly viewed as a tool for economic growth.
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The unexpected ups and downs of Chinese stock market
Unexpected and crazy ups and downs are typical of China’s stock market. Here are a few of them: the Shanghai Stock Exchange Composite Index rose by 250%from 2013 to mid-2015. The amount of margin trading in China’s stock market grew to 2.2 trillion Yuan from 403 billion Yuan between June of 2014 and June of 2015. It is also worth to mention that Chinese stocks lost $3.9 trillionin value from mid-June to early July this year.
Investing in Chinese stocks
Nowadays trading Chinese stocks CFDsis becominga populartool for trading Chinese stocks. But what is a CFD? The latter is also known as a Contract for Difference, which gives investors a chance to speculate on the movement of the underlying asset pricewithout physically possessing it.Among the advantages of CFDs are high leverage, liquidity, flexibility, hedging opportunities and many others.
Although, according to global standards, Chinese stock market is young and highly volatile, this market can serve as a key to reaping great profits.
Article by IFCMarkets.com
