| In 2010, China’s GDP overtakes Japan’s and China becomes the world’s second largest economy. And what is also located second in the world is the common shares of Chinese listed companies in total market capitalization of 4.8 trillion US dollars which is only second to the listed companies in US with total market value of common stock $ 17.17trillions.From the total view of a variety of indicators, China leaps into the front ranks of the world, but at the same time, there is a large gap when it comes to the quality of the economic indicators compared with other developed countries. Speaking of the Stock market, China’s stock market is produced and developed for the adaptation to the economical switch with the character of government impetus and the administrative regulation. So it is unable to display the function of economic resource disposition and also cannot manifest the economic development as "the barometer". This dissertation studies stock market’s basic system and the trend of development by the comparison of China and the US to find the fundamental issue of the development of stock marketTo any country, the basic features of long-term bull market are that the average earnings per share rises continuously and the average price-earnings ratio goes down constantly when the stock price rises. There are three variables deciding earnings per share and price-earnings ratio:stock price, capital stock, and retained profits. If stock price rise fast, it will lead to stock price bubble when capital stock and retained profits are fixed. If the rising speed of stock price and retained profits are constant but capital stock rises fast, it will also lower earnings per share and result in stock price bubble. In contrast, if the growth of stock price and retained profits are fixed, inhibiting and reducing the growth rate of the total share capital will increase earnings per share and reduce the high price-earnings ratio.Equity Size as an indicator can reflect and measure the scale of operations of listed companies, the scale of main business, size of the company’s net profit and corporate value. This indicator is usually measured by stock market value in a mature stock market. In China, this indicator can only be replaced with total shares because the restricted shares still exist, most of the lifted shares of state-owned are actually not tradable and the total market value is uncertainty. In 20 years between 1990s and 2010s, the US stock market, its main-board market is the New York Stock Exchange (NYSE) and the NASDAQ National Market (NNM),experienced two times bull market and two times bear market, which include the bull market between 1990 and 2000, the bear market between 2001 and 2002,the bull market between 2002 and 2007, the bear market between 2008 and 2009.This pattern of bull market much longer than bear market is not only related to the US economic trend and the performance of listed companies on the US, but also related with the policy of US stock market, especially the equity management policies. In this paper analyses the equity management policy of US stock market, and by comparing with the equity management policy of China’s stock market to get the objective basis of a country’s stock market to maintain long-term prosperity and the policy factors of bull market much longer than bear market.This paper major includes seven chapters. The first chapter is an introduction. It introduced the research background, the research significance and research framework. This section leads to the difference of the stock market as the economic barometer between China and the US, from aspects of the China and the US market capitalization, equity ownership concentration and the nature, the ratio of listed companies net profit to the country’s total net profits of enterprise, the ratio of the number of shareholders and fund holders to the total population, share of net profits of technology industry listed companies in all listed companies, and so on.Chapter two compares IPO in China’s stock market with that in US stock market, studied the differences between the two markets. In this chapter, by the study of differences between the two markets’IPO capital, we draw the conclusion that the scale of IPO capital in the US stock market is small. By analysis, we believe that there are three main reasons for the above conclusion. First, the IPO capital scale of private enterprises is small. Second, in a long time NYSE is very strict in IPO. Third, there is not state-owned enterprises in US There are also three reasons for that IPO capital is large-scale in China. First, the IPO of state-owned enterprises is to get out of trouble. Second, split share structure is the reason why state-owned enterprises have large-scale IPO capitals. Third, the imperfect of China’s social security system leads to the state-owned enterprises capital scale is too large in IPO.Chapter three compares seasoned equity offering in China stock market with that in US stock market. In this chapter, we study additional equity in the two stock markets, and draw the conclusion that the relatively large-scale additional equity size leads to the relatively large-scale equity size. The size of seasoned equity offering in US stock market is small, but that in China’s stock market is too large. The reason why there exists no seasoned equity offering aiming to make a quick money is related to institutional system. Three factors lead to the large-scale additional equity size in China’s stock market. Firstly, there are no mechanisms that if a listed company offers seasoned equity too much and its stock price falls, it could be acquired. The second one is large equity and low average stock price. Thirdly, because of the substantial shareholders’ dominance, suppressing making a quick money by offering new issue difficult.Chapter four compares presenting shares in China’s stock market with that in US stock market. In this chapter, this dissertation focuses on Signal Theory and Optimal Trading Range Theory, and these two are the core of presenting shares theories.By the empirical research, we find that US listed company’s presenting shares are consistent with the theories. The samples of US listed company which present shares reflect the fact that these companies are net profit with high～growth style, however, these companies in China differ and are not the main profit sectors. Meanwhile, the above sample companies’overall performance are lower than the market average level. By the empirical research on presenting shares of Shanghai and Shenzhen A shares,we find that Chinese sample companies’ presenting shares are not consistent with the theories.Chapter five compares the stock repurchase in China’s stock market with that in US stock market, mainly researching the differences of stock repurchase between these two stock markets. In this chapter, the research shows that there are significant differences between the two stock markets’repurchase.In the US stock market, there are a large quantity of shares that are repurchased from the secondary market, which benefits the sound liquidity of stock market. On the contrary, in China’s stock market, the quantity of repurchased in China’s stock market is small. Tis factor causes a large part of differences between China’s stock market’s equity and that in US.Chapter six compares the capital stock between the US stock market and that of China.This chapter integrates the contents of the precedingt chapters and makes comparative study about IPO,seasoned equity offering, presenting shares, stock repurchase.finally, a conclusion is drawed that there exists large difference between the overall size of capital stock in the US and China. Moreover,by studying further, it is found that the number of listed companies in New York Stock Exchange and NASDAQ both expands and reduces quickly, and large-sclae dilisting is also existed in the US stock market.Three reansons is mainly contributed to this situation:The activities of merger and acquisition of listed companies is the first cause of large-scale delisting The continuously improved standards and the strict delisting system is the second reason..The sound Third Market is another reason for the large-scale delisting situation situation in New York Stock Exchange and NASDAQ.Chapter seven explains Chinese and American intergenerational population changes, income levels and stock market development. This chapter studies impact of intergenerational population and income levels on the stock market development. Moreover we analyze the US per capita income growth, the number of middle class growth and income growth to investigate deep～seated reasons for differences of huge volatility between China and the US stock market. In addition,2013 is an important year when the largest segment of the population -post～war baby boom generation-begins to retire. Asset prices slumping hypothesis will have significant future pressure on the US stock market, and therefore the US intergenerational population changes has become important influence on the development of the US stock market. This chapter will research generations of population change, income changes in United States to examine the effect of American intergenerational population structure on US stock market.In chapter six and seven,some recommendations which are concern with the impact that equity size,the change of generation and the level of income exert on the stock market are proposed.There are some innovations in this paper:Firstly, this paper argues that equity size should have auto-suppressed market mechanism in a mature stock market, so few Western scholars carry out research on the impact of equity size on stock market, however, China differs. Secondly, This paper maintains that the equity bubble and the price bubble are essentially two sides of a coin, because large equity may lead to lower earnings per share,so a little higher price may induce stock price bubble. Thirdly, the auto-suppressed market mechanism of equity bubble in a mature stock market is researched in this paper.That is eliminating the stock capital equity bubble and inhibiting the incremental equity bubble by purchasing by cash, and purchasing by stock in acquisition and merger,stock repurchasing, reducing shares automatically, increasing the initial offering standard, delisting standard and other measures to make listed companies’business grow faster than capital expansion. The research comes out a conclusion that China should learn from the American experience, which is adopting initiative measures to inhibit the equity increasing quickly, increase the EPS in the shanghai and Shenzhen stock markets, decrease the P/E ratio and avoid the high fluctuation. In this way, Chinese investors are able to share property incomes coming from the economic growth. |
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