llel Market China was first opened to foreign 00018 種00016 second opium wars of I839-42 and I856-6o, when foreigners forced the country to open“ treaty ports” In its 司公限有防股听易灸品物券戳上 oastal cities of Shanghai, Guangzhou 拾 股 理狸栗股 In these cities, foreigners imported 1圆 opium and tobacco, exported tea and silk, and conducted business including shipping, mining, railway construction, 的銀 百 圃 banking and insurance Capital for the 3 various foreign enterprises was raised 挹 瓶孫 abroad in cities such as London and 日 圖通 in colonies such as India and Hong Kong. 給测 In I864, the first fo company, a British company, issued stock for 5o, ooo taels of silver; a tael i was II/3 ounces. Later other foreign Chinese stock certificate from the Schanghai security British American Tobacco Company, and Commodity Exchange Company issued in 1923 the Bank of france, and the Hong ket intermediation. First, there is the After I4 years of difficult negotia ng and Shanghai Banki relative newness of the Chinese stock tions, China was finally admitted tion-the same hSBC still in b market and a lack of consumer educa- the Wto in 2001. Financial services also began to issue stocks and bonds tion about stocks. Second, there is a were one of the central points of con- Their shares in China were traded lack of predictability in the market tention between China and the WTo privately until I869, when the British and the recent downturns in the Chi- members, particularly with the U.S. Stock Company opened in Shanghai nese market in line with global market As part of the agreement with the U.S. to trade shares in foreign companies. downturns. Third, most of the listed China will open its securities industry n I891, the Shanghai Shareholders Association was established, but trading state-owned enterprises, not the small that foreign financial institutions have was slow and took place mainly in the and medium-sized companies that are been allowed a 33 percent stake in Western Chamber of Commerce Build normally among the most profitable fund management enterprises since and in front of the hsbc front and in most need of capital. Fourth, Chinas formal accession to the wTo door until I 898 there is a lack of company transparency, That stake is permitted to rise to 49 Foreign business activity greatly a lack of modern accounting standards, percent three years after Chinas WTo expanded in the wake of China's loss in the Sino-Japanese War of 1895. The a still developing financial institution accession. Also, U.S. underwriters are eight foreign powers forced the Qing infrastructure, and a pattern of scandal allowed to invest up to 33 percent in Imperial government to permit foreign and market manipulations that have joint ventures. In addition, joint ven- enterprises to operate throughout hurt investors' trust in stock. Finally, tures with U.S. minority stakes are China with the protection of the proceeds from stock listings have often permitted to underwrite domestic unequal Sino-foreign treaties. Foreign been used for purposes other than those securities issues, as well as to under- business activities boomed, particu listed in the stock prospectuses, usually write and trade in foreign-currency larly in railways and banking, and the to loan to the parent company, to spec- denominated securities (debt and number and value of foreign stocks ulate in the market, or to make other equity), and are allowed to carry on skyrocketed. As a result, the(foreign) investments such as lending in the black fund management under the same con- Shanghai Stock Exchange was restru market or investing in real estate ditions as Chinese companies ed in 1903, and registered in Hong www.FinanCialhiStoRy.org29FinAnCialHistOry-sPriNg2003www.financialhistory.org Financial History ~ Spring 2003 29 ket intermediation. First, there is the relative newness of the Chinese stock market and a lack of consumer educa￾tion about stocks. Second, there is a lack of predictability in the market and the recent downturns in the Chi￾nese market in line with global market downturns. Third, most of the listed companies are large and medium state-owned enterprises, not the small and medium- sized companies that are normally among the most profitable and in most need of capital. Fourth, there is a lack of company transparency, a lack of modern accounting standards, a still developing financial institution infrastructure, and a pattern of scandal and market manipulations that have hurt investors’ trust in stock. Finally, proceeds from stock listings have often been used for purposes other than those listed in the stock prospectuses, usually to loan to the parent company, to spec￾ulate in the market, or to make other investments such as lending in the black market or investing in real estate. After 14 years of difficult negotia￾tions, China was finally admitted to the WTO in 2001. Financial services were one of the central points of con￾tention between China and the WTO members, particularly with the U.S. As part of the agreement with the U.S., China will open its securities industry in various ways. The major reform is that foreign financial institutions have been allowed a 33 percent stake in fund management enterprises since China’s formal accession to the WTO. That stake is permitted to rise to 49 percent three years after China’s WTO accession. Also, U.S. underwriters are allowed to invest up to 33 percent in joint ventures. In addition, joint ven￾tures with U.S. minority stakes are permitted to underwrite domestic securities issues, as well as to under￾write and trade in foreign-currency denominated securities (debt and equity), and are allowed to carry on fund management under the same con￾ditions as Chinese companies. Parallel Markets China was first opened to foreign commerce as a result of the first and second opium wars of 1839 – 42 and 1856 – 60, when foreigners forced the country to open “treaty ports” in its coastal cities of Shanghai, Guangzhou (Canton), Fuzhou (Fukien), Xiamen (Amoy), and Ningbo (near Shanghai). In these cities, foreigners imported opium and tobacco, exported tea and silk, and conducted business including shipping, mining, railway construction, banking and insurance. Capital for the various foreign enterprises was raised abroad in cities such as London, and in colonies such as India and Hong Kong. In 1864, the first foreign-funded company, a British company, issued stock for 50,000 taels of silver; a tael was 1 1/3 ounces. Later other foreign companies, including Jardine Matheson, British American Tobacco Company, the Bank of France, and the Hong Kong and Shanghai Banking Corpora￾tion — the same HSBC still in business —also began to issue stocks and bonds. Their shares in China were traded privately until 1869, when the British Stock Company opened in Shanghai to trade shares in foreign companies. In 1891, the Shanghai Shareholder’s Association was established, but trading was slow and took place mainly in the Western Chamber of Commerce Build￾ing and in front of the HSBC front door until 1898. Foreign business activity greatly expanded in the wake of China’s loss in the Sino-Japanese War of 1895. The eight foreign powers forced the Qing Imperial government to permit foreign enterprises to operate throughout China with the protection of the unequal Sino-foreign treaties. Foreign business activities boomed, particu￾larly in railways and banking, and the number and value of foreign stocks skyrocketed. As a result, the (foreign) Shanghai Stock Exchange was restruc￾tured in 1903, and registered in Hong Chinese stock certificate from the Schanghai Security and Commodity Exchange Company issued in 1923. © Chinese Securities Certificate Rarities Collection