China's Emerging Financial Markets

Abstract

This case documents the many unusual features and puzzles of Chinese financial markets (e.g., foreigners' receiving large discounts in buying Chinese shares relative to Chinese investors). The case illustrates how government policies can have a profound impact on the development of financial markets. Students analyze how policies work and why policies are imposed in China and generally not elsewhere. It also illustrates the perils and added risks from government regulation in financial markets.

Excerpt

UVA-F-1393

CHINA'S EMERGING FINANCIAL MARKETS

If you have a strong constitution and do not try to be a clever stock-picker, but rather decided to buy every existing (Chinese) B-Share issue, and every (Chinese) issue that came, I have little doubt you would make a lot of money over the years.

—Benjamin H.B. Wrey, Chairman, Henderson Administration Group PLC

Police with cattle prods and batons battled to keep order last night as thousands of Chinese thronged to Shenzhen for the chance to buy shares in a wave of get-rich-quick fever.

China's capitalist revolution went mad with a deluge of people hoping for the chance to buy shares in the city's Stock Exchange.

. . .

Keywords: financial management, emerging markets, valuation