Understanding China's Stock Market Structure
China has three securities exchanges: Shanghai, Shenzhen, and Beijing. For beginners, the primary operational markets are Shanghai and Shenzhen, collectively known as the "Shanghai-Shenzhen Stock Exchange."
- Shanghai Composite Index: Reflects the overall price index of all stocks listed on the Shanghai Stock Exchange, indicating market trends. Recently, it surged from 2,700 to 3,600 points.
Stock Codes:
- Shanghai: Typically starts with 60
- Shenzhen: Starts with 000
- Growth Enterprise Market (GEM): Starts with 300
- Small & Medium Enterprise Board: Starts with 002
Trading Hours and Rules
Market Hours: Monday to Friday (excluding holidays)
- Pre-market orders: Starting at 9:15 AM (call auction)
- Trading hours: 9:30 AM–11:30 AM and 1:00 PM–3:00 PM
- Minimum Purchase: 100 shares (1 lot). For high-priced stocks like Kweichow Moutai (~¥1,700/share), 1 lot costs ~¥170,000.
Step-by-Step Guide to Stock Account Opening
1. Choosing a Broker
Select a reputable securities firm with quality services through research or referrals.
2. Required Documents
Prepare:
- ID card
- Bank card
- Mobile number
3. Online Application Process
- Visit the broker’s website or download their app.
- Complete the online application form.
- Upload ID photos, bank card details, etc.
- Undergo video verification (if required).
- Sign agreements and risk disclosure documents.
- Await approval (1–2 business days).
- Receive account credentials upon approval.
- Link your bank card for fund transfers.
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Key Considerations for Stock Trading
Transaction Fees
- Commission: 0.015%–0.03% of trade value (min. ¥5 per transaction). Negotiable for large accounts.
- Stamp Tax: 0.05% (charged only when selling).
Example: A ¥100,000 trade at 0.02% commission = ¥200 fee.
Trading Rules
- T+1 Settlement: Stocks bought today can only be sold the next trading day.
- Fund Withdrawal: Proceeds from sales are available for withdrawal the following day.
Stock Price Fluctuation Limits by Market Segment
| Market Segment | Daily Limit |
|---|---|
| Shanghai/Shenzhen Main Board & SME Board | ±10% |
| GEM & STAR Market | ±20% |
| Beijing Stock Exchange | ±30% |
| ST/*ST Stocks | ±5% |
Note: Hong Kong stocks (via Hong Kong Stock Connect) have no daily limits and follow T+0 rules.
Funding Requirements for Specialized Markets
| Market | Minimum Asset Requirement* | Trading Experience |
|---|---|---|
| Hong Kong Connect | ¥500,000 | None |
| GEM | ¥100,000–200,000 | 2+ years |
| STAR Market | ¥500,000 | 24+ months |
| Beijing Exchange | ¥500,000 | 24+ months |
| Margin Trading | ¥500,000 | 6+ months |
*Based on 20-day average account balance.
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Pro Tips for New Investors
- Avoid Leverage: Never borrow money to trade. Margin trading amplifies risks.
- Don’t Chase Peaks: Stay disciplined; avoid emotional decisions.
- Diversify: Consider index ETFs (e.g., SSE 50, CSI 300) for lower-risk exposure.
- Stay Informed: Monitor macroeconomic signals and stick to your investment plan.
FAQ Section
Q: Can I trade immediately after opening an account?
A: No. Trading starts on the next business day after account activation.
Q: Why can’t I withdraw sale proceeds instantly?
A: Funds settle under T+1 rules—available for withdrawal the following day.
Q: Are ETFs safer than individual stocks?
A: ETFs spread risk across multiple stocks but still carry market volatility.
Q: What’s the fastest way to start trading Hong Kong stocks?
A: Open a Hong Kong Stock Connect account with a ¥500,000 balance.
Q: How do I reduce commission costs?
A: Negotiate with your broker based on account size or switch to low-fee platforms.
Final Note: Whether investing in stocks or ETFs, remember—"High returns = High risks." Tailor your strategy to your financial goals and risk tolerance. Happy investing!