While the Far East has been extremely active in the trading of goods and commodities for thousands of years, how do Chinese stock markets compare to their US counterparts? 

China is one of the world's most influential countries, but domestic stock markets are in their relative infancy. However, recent developments in the Far East have prompted a considerable increase in Chinese stock market trade.


Stock market history


Many people will be surprised to learn that the Shanghai stock exchange and the Shenzhen stock exchange have a history which goes back decades, compared to hundreds of years for the New York Stock Exchange. Over the years, we have seen the creation of new markets in the US, such as the NASDAQ, which is focused on technology shares. In addition, the Chinese authorities now allow Chinese companies to operate dual listings with Hong Kong via the "connect" trading system. This has the potential to make a significant long-term impact.


Stock-market capitalisation


Without looking at the figures, many people will automatically assume that Chinese and US stock markets areprobably similar in size. As of September 2022, the New York Stock Exchange was capitalised at just under $29 trillion. On the other hand, the leading Shanghai stock exchange had a market cap of just over $7 trillion. It will be interesting to see how these figures look in 10 years and whether Chinese stock exchanges can reduce this valuation deficit.


Interaction with the economy


There is a very different outlook on stock exchanges for those living in China and those living in the US. The New York Stock Exchange has been central to US society and the economy for hundreds of years. The connection in China has never been that strong, either on an individual or corporate level. In light of how stock market crashes significantly impact society, this may not be a bad thing!


Corporate finance


While there may be differences in the characteristics of each stock exchange, it is essential to recognise these are both vast economies. Corporate funding is integral to any economy, with China and the US at different ends of the spectrum. US companies tend to make full use of equity finance, while Chinese counterparts often rely on bank loans and retained earnings.


Institutional and retail investors


Interestingly, while historically, the link between Chinese society and the stock exchange has been relatively weak, Chinese markets are dominated by retail investors. The US stock market is dominated by institutional investors, although indirectly, via pension funds and other investment vehicles, retail investors have a significant share.


International investment


As discussed above, the Chinese authorities are using the"connect" trading system. This allows Chinese companies to operate dual listings on the Hong Kong stock exchange, gaining exposure to foreign investment. While this will likely change in the future, as of September 2022, international investors owned just 5% of Chinese shares. Akin to the London stock exchange, US markets have a much broader mix of local and international investors.




The Chinese and US economies are powerhouses and significantly influence the worldwide economy. There are significant differences in stock markets although we have seen considerable changes recently. The Chinese authorities are now embracing foreign investment in Chinese companies directly and via Hong Kong. It is safe to assume that today's situation will likely be very different in another decade.

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