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Chinese A And B Share Market Segmentation Test

Posted on:2005-06-01Degree:DoctorType:Dissertation
Country:ChinaCandidate:H H YinFull Text:PDF
Abstract/Summary:PDF Full Text Request
There is always an obvious segmentation between China's securities market and theworld capital market due to some systematic reasons and investment limitations. Evenin the domestic market, the separation between the A-share market and the B-sharemarket is also evident. But it is dynamically changing with the development ofChina's capital market and the syncretization with the foreign world. In Feb, 2001,China's government declared the opening of the B-share market to domestic residents,which inevitably brings far-reaching effects on not only A-share market and B-sharemarket, but also the relevancy between the domestic and overseas markets. At thesame time, the opening of the B-share market has caused changes of thecharacteristics of the B-share market structure representing the effects of liquidity andcorporate governance on formations of stock prices as ultimately engenders stockprice differences between A-shares and B-shares of those dual-listing corporations. In this treatise, we are aiming to study and explain the following issues through thepositive analysis of China's A-share and B-share markets as well as dual-listingcorporations: (i) the tendency of the segmentation of China's securities market; (ii) theeffects of the opening of the B-share market to domestic residents in 2001 on thesegmentation of China's securities market; (iii) factors affecting the marketsegmentation in the form of stock price differences between A-shares and B-shares,and responses of corporate governance and information spreading; (iv) the practice ofmarket segmentation and asset pricing theories on China's dual-listing corporationswhich have issued both A-shares and B-shares as well as deficiencies of thosetheories. Through the positive analysis, we can see that the relevance between China'ssecurities market on the whole and the world market is gradually increasing. Theopening of the B-share market has evidently mended the segmentation of China'sdomestic securities market, and the information flow between markets is becomingmore active. Compared with A-shares, B shares tend to have investment values. But 2due to the fact that the A-share market has more influences on B-shares and manyforeign institutional investors withdrew their investments in B-shares, thesegmentation between the B-share market and the world market is deepened. OfChina's investors is becoming mature in the investment philosophy and paying moreattention to fundamental factors of listed companies, such as internal governancestructures, earning abilities, etc, which have been used in their investment selections.On the other hand, the analysis of stock price differences of A-shares and B-shareshas proved the efficient applications of the liquidity theory and investor recognizationtheory to China's B-share market. The treatise shows that the segmentation between A-share and B-share markets cannot be rooted up fundamentally in the near future considering the absence ofsubsequent institutions. The efficient way to sew up the segmentation betweenmarkets is to introduce institutional investors of which investment funds arerepresentatives.
Keywords/Search Tags:Stock Market, Market Segmentation, A- Share, B- Share, Corporate Governance, Information Flows
PDF Full Text Request
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