A Study On Developing Chinese Stock Market

The stock market develops rapidly and becomes one of the most important Marci-economy variables since 1990's. however, much risks consists in the market during the period of developing and transition. The enormous adjustment from the beginning of the century rooted in the institutional risks, in despite of technical factors. The problem of immoderate or undue intervention from the government exist in the mode of supervision and management, stock company, stock-dealer, the protection of investor, medi-organization, and so on. The administrative intervention results in the collision between the stock culture and the collectivistic traditionalism, as well as the political and economical institution, which are intensively affected by the traditionalism. This administrative intervention interferes the power of market and results in institutional risk. We must push the development pf market economy, foster Chinese stock cultural and make our country based on the social contract theory.From the 1992 to 2004, the investor pay out 2300 billion Yuan on the market, while the market value of A-share of 1352 enterprises issuing is 1290 billion Yuan, the story tells us the fact: the net earning of all the investor is negative 1000 billion Yuan, however, the government earns more than 480 billion Yuan in form of stamp duty, commission, promissory note, by contrast, because of the mode of "provide fund to state-owned enterprises," the holder of the stated-owned stock and incorporated body win 1210 billion Yuan which is added by 680 billion Yuan fund and accrued 530 billion Yuan from crude stocks, in the same period, holder of A-share earned only 70 billion Yuan Payout and dividend .these data tell us the fact: the stock market is the heaven cheating money for the enterprises!Consequently, we must reform our political institution particularly economy institution, improve the market system and the institution of capital market, transit the planned system toward marketed-system completely, capital market if we want to develop the market normally.Secondly, the government must supervise and regulate by the marked ways. The means result in the facts: the goal of providing fund for the State-owned enterprise anddistracting risk in the commercial state-owned banks additionally, we know the fact that the inefficiency of allocating resources result from the defection of institution on the discrimination of ownership on selecting the enterprises.The corporations are faced with such problem as the deviation of the coequality of right and shares, the monopolization of the state-owned shares and the non-currency. These disfigurements bring on overly concentrative right of shares, the failure of supervise mechanism, thus result in the inefficiency of the market. Thus, we have the third method. To improve the performance of the enterprises and make the base more stability, we may be realize the entire currency and coequal right of coequal share; provide an impartial admittance mechanism and perfect exit channel; accelerate the development of enterprises bond market.The characteristic of the structure of investor is the absolute predominance of the middling and small investors, which means a lesser organizational investor. These cases, in connection with the limitation of the protect mechanism of investor, prick up the speculative cultural and decrease the stability. To make the structure of investor more perfectly, afflux more the capital; increase the stability, we should develop and expand the securities fund rapidly, especially permit the retirement pension and insurance fund influx the stock market directly. This is the fourth method.On the protection of the authorities and benefit of investors, from the positive view, perfect protection of investor can favor the expanse of the stock market, realize the maximum of the value of enterprises; promote the increase of economy. From the negative view, the externality of the stock market also requires the rigid protection of investor. In order to construct and perfect the protection institution of investor, we should improve the supervise mechanism of the enterprises, reconstruct relative judicial system, have the medi-organization paying a more active role, ameliorate the government's mode of supervise. In a word, we must make our stock market institution based on the goal of "protection investors", not the "convenience the financing of the state-owned enterprises ". This is the fifth method.We analyze the reason and solution from the view of institution and enclosure the main of government -enterprises -investor on the risk of stock market. In addition,both the money market and the government bond market impose on the stock market. We could develop a government bond market with a rational time structure, marketable rate mechanism of bond and moderate scale if we want to improve the efficiency of monetary policy and promote the stock market indirectly. By developing the monetary market, connecting the investing access between the capital market and monetary market, dredging the conductive mechanism of monetary policy, we can promote the development of stock market.