1. Concept and status

The stock market, also known as the secondary market or the secondary market, is the place where stocks are issued and circulated, and can also be said to be the place where the issued stocks are bought and sold and transferred. Stock trading is done through the stock market. Generally, the stock market can be divided into one or two levels, the primary market is also called the stock issuance market, and the secondary market is also called the stock trading market.

We have already said that stocks are a kind of securities. In addition to stocks, securities also include state bonds, corporate bonds, real estate mortgage bonds, and so on. National bonds appeared earlier and were the first valuable bonds to be traded. With the development of the commodity economy, stocks and other valuable bonds gradually emerged. Therefore, stock trading is only one component of the trading of valuable bonds, and the stock market is only one of many marketable securities markets. At present, there is very little single stock market, and the stock market is just the place where the stock market specializes in stocks.

The stock market is one of the main ways for listed companies to raise funds. With the development of the commodity economy, the company is growing in size and requires a large amount of long-term capital. However, if the capitalization of the company itself is accumulated, it is difficult to meet the needs of production development, so it is necessary to raise funds from the outside. There are generally three ways for companies to raise long-term capital: one is to borrow from banks; the other is to issue corporate bonds; the third is to issue shares. The first two methods have higher interest rates and time limits, which not only increases the company's operating costs, but also makes the company's capital difficult to stabilize, and thus has great limitations. And by using the method of issuing stocks to raise funds, there is no need to repay the principal and interest, and only need to allocate a portion of the profits to pay dividends. Comparing these three financing methods together, the way to issue stocks is undoubtedly the most economical, and is the most beneficial for the company. Therefore, the issue of stocks to raise capital has become an important form of economic development of large enterprises, and stock trading has occupied a very important position in the entire securities trading.

The changes in the stock market are closely related to the development of the entire market economy. The stock market has always played a role as a barometer of the economic situation in the market economy.

2. The nature and function of the stock market

Through the issuance of stocks, a large amount of capital flows into the stock market, and flows into the enterprises that issue stocks, which promotes the concentration of capital, improves the organic composition of corporate capital, and greatly accelerates the development of the commodity economy. On the other hand, through the circulation of stocks, small amounts of funds have been pooled, which has accelerated the concentration and accumulation of capital.

Therefore, the stock market provides a basic place for the circulation of stocks on the one hand, and stimulates people's desire to buy stocks on the one hand, and guarantees the issuance of the primary stock market. At the same time, since the trading price of the stock market can objectively reflect the supply and demand relationship of the stock market, the stock market can also provide a reference for the price and quantity of the stocks in the primary market.

3. Stock issuance market

The issuance market refers to the whole process of stocks from planning to sales, and the issuance market is a market where funds demanders directly obtain funds. The establishment of a new company, the capital increase or borrowing of the old company must be through the issuance of the market, and the funds must be raised by means of the occurrence and sale of stocks, so that the funds are transferred from the supplier to the demander, that is, the savings are converted into investment. In order to create new real assets and financial assets, increase total social capital and production capacity, and promote social and economic development, this is the role of the primary market.

The characteristics of the issuance market are as follows: there is no fixed place, it can happen in investment banks, trust investment companies and securities companies, and new shares can be sold publicly in the market. Second, there is no uniform time for the stock issuers to The needs and market conditions go to the discretion of when to issue.

The occurrence market consists of three main factors interconnected. These three are stock issuers, stock underwriters and stock investors. The size of the issuer's stock issuance and the actual investment ability of the investor determine the stock capacity and development level of the issue market. At the same time, in order to ensure the smooth progress of the transaction, the producers and investors can smoothly achieve their goals. The intermediary issuance and underwriting of the stock market, issue the stock on behalf of the issuer, and charge the issuer the processing fee. In this way, the issue market is centered on the underwriters, and the issuer is contacted first, the investors are contacted, and the stock issuance activities are actively carried out.

4. Stock exchange market

The stock circulation market is a market in which the issued stocks are transferred, traded and circulated on time, including the exchange market and the over-the-counter market. Since it is based on the distribution market, it is also called the secondary market. In contrast, the structure and trading activities of the stock market are more complex than the issuance market, and their role and impact are greater.

The stock market contains all the activities of stock circulation. The existence and development of the stock market has created a favorable financing environment for stock issuers. Investors can buy and sell stocks at any time according to their investment plans and market changes. As they relieved the worries of investors, they can participate in the subscription activities of the stock issuance market with confidence, which is conducive to the company's financing of long-term funds, the smooth flow of stocks also played a positive role in the stock issue. For investors, through the activities of the stock market, long-term investment can be shortened, and the stock and cash can be converted at any time, which enhances the liquidity and security of the stock. The price in the stock circulation market is a barometer reflecting the economic trends. It can sensitively reflect the supply and demand of funds, market supply and demand, industry prospects and changes in the political situation. It is an important indicator for economic forecasting and analysis. For enterprises, The transfer of equity and fluctuations in the stock market are indicators of their business conditions, and they can provide a large amount of information to enterprises in a timely manner, which helps them to make business decisions and improve business management. It can be seen that the stock circulation market plays an important role.

The method and form of transferring stocks for trading is called the trading method, which is the basic link of stock circulation trading. There are many kinds of trading methods in the modern stock circulation market, which can be divided into the following three categories from different angles.

5. Securities institutions

Securities institutions include securities management institutions, securities trading institutions, securities trading institutions and securities service institutions.

Securities management institution

China has established a securities market management system that combines a specialized securities management institution with a national unified, cross-sectoral, and self-regulatory securities industry organization. In October 1992, China officially established the Securities Management Committee of the State Council (the Securities Regulatory Commission) and the China Securities Regulatory Commission (China Securities Regulatory Commission). The CSRC is the authority for securities management in China. The chairman is concurrently appointed by the vice premier of the State Council. The members are headed by the State Commission for Reform, the People's Bank of China, the Ministry of Finance, and the Administration for Industry and Commerce. The CSRC has a unified macro management of the national securities market. The CSRC is the office of the CSRC and supervises and manages the securities market according to the authorization of the CSRC.

In addition to the above-mentioned government agencies, China has also established a self-regulatory securities management organization, the China Securities Industry Association. It is a corporate legal person established in 1990 after being approved by the People's Bank of China and registered with the Ministry of Civil Affairs. A self-regulatory organization of the national securities industry that members voluntarily form.

Securities institution

Also known as a securities firm or a securities broker, it is an intermediary in the securities market, and is an enterprise legal person that specializes in securities business and profits from it. Its role has two points: (1) acting as an intermediary for securities funders and securities investors in the distribution market; and (2) acting as an intermediary for securities trading in the circulation market. There are two main types of major securities institutions in China: one is a securities company. A securities company is a securities operation institution with legal person qualifications directly engaged in securities issuance and trading business in China. Its main business scopes include: agency securities issuance, securities self-operated, agency securities transactions, agency securities repayment of principal and interest, payment of dividends, acceptance of customers. Entrusted to collect securities principal and interest and dividends, agent transfer and so on. The second is a trust investment company. A trust and investment company is a financial institution that operates for the purpose of profit and operates the trust business as a principal. In addition to handling trust investment business, it can also set up the securities department to handle securities business. Its business scope mainly includes: securities agency sales and underwriting, securities agency sales and self-operation, securities consulting, custody, and agency repayment of principal and interest. .

Securities trading institution

It mainly includes stock exchanges and stock exchange centers. We will introduce the stock exchange in detail in the next section.

Securities service agency

It is an institution that serves securities trading and securities trading. China's securities services mainly include:

(1) Securities registration company. The securities registration company is an independent enterprise-type securities service institution. Its main business is: public registration and non-public issuance of securities registration, listing and unlisted registered securities transfer registration, agency securities custody, agency securities Repayment of principal and interest and dividends, engaging in securities-related consulting business and other business approved by the competent authority.

(2) Securities rating company. A securities rating company is an enterprise legal person specializing in the securities rating business. It is generally independent and unofficial. The main business is an objective, accurate, true and reliable rating of the issuing company of the securities, and is responsible for providing the rating. Results and related information.

    6. Stock Exchange

The stock exchange is a tangible place for centralized securities trading, which is approved by the government securities authority in accordance with relevant state laws.

From the stock trading practice, it can be seen that the stock exchange helps to ensure the continuity of the stock market operation, realize the effective allocation of funds, form a reasonable price, reduce the risk of securities investment, and link the long-term and short-term interest rates of the market. However, stock exchanges may also have the following negative effects:

1. Disrupt financial prices. Since a large part of the stock exchanges are only resold and bought back, in the stock exchange, the turnover of securities trading is large, but the actual delivery is not large. Moreover, since such transactions do not actually represent the sale of real financial assets, the form of supply and demand does not reflect the actual situation to a large extent, and may disrupt financial prices to a certain extent.

2. Vulnerable to false news. Stock exchanges are particularly sensitive to all types of news. Therefore, as long as someone deliberately spreads false news, or misrepresents the financial situation of the company, or walks through the vain political trends, and so on. Both may cause exchange price changes to be fierce, some speculators will suffer significant losses, while others may benefit greatly.

3. Engage in improper transactions. Engagement in unfair transactions mainly involves engaging in matching transactions, virtual trading and partnership trading. Matching transactions means that the trader entrusts two brokers through a variety of ways, buying one by one at a limited price, and selling the same amount of securities by one party to raise or lower the normal price of the security. A false-throwing transaction means that the trader deliberately throws the securities at a high price, and at the same time pre-empts another broker to make the acquisition, and stipulates that all losses are still borne by the seller, and as a result may cause the false prosperity of the securities. A partnership transaction involves the engagement of two or more people to manipulate the price. Once the purpose is reached, the partner will be dissolved, including the trading partner (the partner or secretly buying the securities of interest in the open market to avoid the price increase of these securities, Or by straying the company's unfavorable news by walking down the stock price it wants to buy) and the option partner (investors buy securities at a favorable price, usually by getting through the company's board of directors, usually returning privately from a portion of the profit) To the director).

7. China's stock exchange

At present, there are two securities transactions in China, one in Shanghai and one in Shenzhen.

The Shanghai Stock Exchange is currently the largest securities trading center in China. It was established on November 26, 1990 and registered for RMB 10 million. The Shenzhen Stock Exchange is the second stock exchange in China. It was established in 1989 and officially opened in July 1991 with the approval of the People's Bank of China. Since the opening of these two exchanges, they have continuously improved their market operations and gradually realized the computerization, networking and paperless operation of stocks. At present, the securities listed on these two exchanges include (A shares, B shares), national debt, corporate bonds, warrants, funds and so on. By the end of 1997, there were 422 stocks (including A shares and B shares) listed on the Shanghai Stock Exchange with a market value of 921.807 billion yuan. There are 399 (including A shares and B shares) listed on the Shenzhen Stock Exchange with a market value of 831.117 billion yuan.

The Shanghai Stock Exchange and the Shenzhen Stock Exchange are organized in accordance with the internationally accepted membership system and are non-profit institutions. Its business scope includes: 1. Organizing and managing listed securities; 2. Providing venues for centralized securities transactions; 3. Dealing with liquidation and delivery of listed securities; 4. Providing information on listed securities markets; 5. Handling licenses or entrusted by the People's Bank of China Other business. Its business objectives are: to improve the securities trading system, strengthen the securities market rights, promote the development and prosperity of the Chinese securities market, and safeguard the legitimate rights and interests of the state, enterprises and the public.

The Shanghai Stock Exchange and the Shenzhen Stock Exchange are composed of four parts: members, councils, general managers and supervisors. Members are legal persons who have been approved and have certain conditions. They all have equal rights, have the right to participate in the general meeting, have the right to vote and be elected to the directors and supervisors of the exchange, and have the right to propose and vote on the affairs of the exchange. The General Assembly is the highest authority of the stock exchange and is held once a year. The Board of Directors is responsible for the general affairs decision-making body of the stock exchange general meeting and is responsible to the general assembly. The general manager is the legal representative of the exchange and is nominated by the board of directors for approval by the competent authority. The general manager's duties are to organize and implement the resolutions of the General Assembly and the Board of Directors and report to them; to preside over the day-to-day business and administrative work of the Firm; to appoint the heads of the Department; to handle matters related to the Office. The stock exchange also has a board of supervisors, which is responsible for the supervision of the financial and business work of the firm and is responsible to the general assembly.

8. Characteristics of China's stock market

China's Shanghai and Shenzhen stock markets have developed from a local stock market and become a national stock market. When it officially opened in December 1990, the number of listed stocks was only a small number, and its scale was small, and the listed stocks were basically local stocks in Shanghai or Shenzhen. For example, only one of Shanghai’s old eight stocks was Off-site stocks. In the development of its stock market, due to the lack of strategic considerations, the expansion of funds and the expansion of stocks are not synchronized, especially the expansion of funds, which is much faster than stock expansion. In the five years from 1991 to 1996, the stock business department expanded from dozens to nearly 3,000 now. The market capital has increased from more than 1 billion yuan to more than 300 billion yuan, and the listed companies are only from the current year. The number of 20 companies has increased to over 400, and only 30 billion shares have been listed. The supply and demand relationship in the stock market is extremely unbalanced, which has caused the stock price to skyrocket in the first two years.

The Shanghai stock market began to count from December 1990. It rose to 780 points at the end of 1992, with an average annual increase of 179%. The Shenzhen stock market started counting in April 1991 and rose to 241 points at the end of 1992. The average annual increase also has 68.5%.

Since the stock price has risen excessively in the first two years, with the expansion of the stock, after the stock price reached a historic height in the first half of 1993, the stock price stopped, and the Shanghai and Shenzhen stock markets entered a difficult adjustment stage. In 1993, the closing indices of the Shanghai and Shenzhen stock markets were 833 points and 238 points respectively. The closing indexes in 1994 were 647 points and 140 points respectively. The closing indexes in 1995 were 555 points and 113 points respectively. According to the rising speed of foreign stock indexes and the actual situation in China, this adjustment of China's stock market is estimated to be quite a few days. If the country does not experience more serious inflation, if the Shanghai Composite Index is to stand at 1000, it will take more than five years.

China's stock market has more investors, and the amount of funds entering the market is large. However, there are few stocks listed and circulated, and the stock market shows an obvious shortage of stocks. According to preliminary statistics, by the end of October 1996, there were about 18 million registered stocks in the Shanghai and Shenzhen stock markets, while the tradable shares of the Shanghai and Shenzhen stock markets were about 30 billion shares in the same period. On average, each stockholder had only 1,700 shares. According to preliminary estimates, the listed company's after-tax profit per share in 1995 was less than 0.30 yuan, and the shareholder's per capita income was only 500 yuan. According to the per capita market capitalization of 20,000 yuan, the return on stock investment (excluding transaction tax, The fee) is only 2.5%, which is only equivalent to the current savings rate. And because stock investors frequently trade in the stock market, the sum of their surrender fees and transaction taxes is often more than the sum of the after-tax profits of the outstanding shares.