The year 2020 was a fantastic year for stock trading in China, with the total market cap of the country’s stock markets reaching an all-time.
According to data presented by TradingPlatforms, the combined market cap of China’s stock market jumped by 33% year-over-year to 79.7 trillion yuan or $12.4trn in 2020, the highest value in the country’s history.
Market Cap Surged by 83% in Two Years
Over the last four decades, China has experienced an incredible growth rate. Along with impressive economic achievements, the country also witnessed the rapid development of its financial system.
Nevertheless, China’s financial reform is still in process in many directions, developing domestic financial markets, promoting bond and equity markets, liberalizing exchange rates and capital accounts, and improving financial regulation.
One crucial aspect of the financial market development strategy in the country was the fostering of innovation. In recent years, China had the problem that upcoming domestic tech companies preferred to list on overseas stock markets. So, Shanghai Stock Exchange and Shenzhen Stock Exchange, as the two major stock exchanges in Mainland China, established boards with more lenient listing requirements, allowing even startups that had not yet turned a profit to gain access to the financial market.
As a result, the market capitalization of the country’s stock market increased significantly. Between 2014 and 2017, the market cap of China’s stock market jumped by 52%, reaching 56.7 trillion yuan or $8.8trn that year, revealed the China Securities Regulatory Commission data.
After a drop to $6.7trn in 2018, the market cap jumped by 37% YoY to $9.2trn in 2019. However, statistics show that last year witnessed the biggest annual growth, with China’s stock market reaching $12.4trn value, an impressive 83% increase in two years.
Trade Revenue Surged by 62% in a Year
Mainland China has two major stock exchanges. The first one is the Shanghai Stock Exchange that consists of the Main Board and the Star Market. The companies listed on the Main Board are mature and established in their industries, while the Star Market targets innovative startups.
The other major stock exchange is the Shenzhen Stock Exchange, separated into three boards, the Main Board, the SME Board and ChiNext Market.
Besides impressive growth of total market capitalization, China’s stock markets also witnessed a surge in trade revenue last year. In 2020, China’s stock market generated a revenue of over 206 trillion yuan or nearly $32trn, a massive 62% increase in a year. Still, this was 12% less than the trade revenue generated in 2015, as the record year in the country’s history.