Formation of China’s Capital Market

Abstract

The article presents an in-depth analysis of the formation and development of the capital market (stocks and bonds segment) in China. The factors determining the valuation of shares that are in circulation are highlighted. While the first factor identifies an assessment based on the company’s financial statements, the second factor considers current market conditions and investor sentiment. Examining historical data, it is interesting to note that from 2000 to 2006, the total market capitalization of stocks remained stable and amounted to a substantial 4 trillion yuan. However, in 2007 There was a significant shift when the market capitalization grew significantly and reached as much as 30 trillion yuan. This sudden growth can be explained by various reasons, such as increased investor confidence, favorable economic conditions and the introduction of progressive financial regulation. In addition, it is important to note that in the same year, the Shanghai Composite index (a key indicator of the Chinese stock market) reached an unprecedented value of 6,123.04 points. This indicator demonstrated the stability and potential of the Chinese capital market, and attracted both domestic and international investors. Thus, the analysis presented in the article reveals the intricacies of the Chinese capital market and the mechanisms of its assessment. This analysis establishes the importance of both book value and market value in determining the valuation of outstanding shares. In addition, historical trends have highlighted the resilience and vulnerability of the market to external shocks, as evidenced by significant fluctuations in market capitalization. In general, this study helps to understand the Chinese capital market and its evolution over time.

Keywords

• regional efficiency
• indices
• financial technologies
• financial innovations
• financial depth
• economy monetization
• macroeconomic impact
• banking sector
• concentration