Research On Short - Term Crisis Of Chinese Concept Stock

China stocks has collectively lost credit due to blocked by short-sellers in theAmerican Security Market since the year2010. As a trading system in the developedmarkets abroad, securities short mechanism is regarded as a mark for a mature market.Short mechanism is able to improve the market flexibility, balance the supply anddemand, and promote the stability of the market price, thus serving as an importanttool to perfect the resource allocation function of our securities market.Chinese security market is an emerging market in development, and tops the world interms of vulnerability. As that Chinese concepts stock experienced a crisis of goingshort is a wake-up call for domestic companies, deficiencies of Chinese enterprisesand Chinese securities market are to be identified by the crisis encountered byChinese companies listed in the United States and other developed markets. Havingdirectly blocked Chinese concepts stocks, shorting contains both huge risks andpositive aspects, and the impact it brings is not entirely negative. By analysis, it canbe found that this crisis really hit some listed companies with financial problems,while the development of Chinese concepts stocks has not been brought down afterthe crisis.That China concepts stock experienced the crisis of going short shows the maturecharm of the system of American stock market. Nowadays, short mechanism has notbeen established in China. Concentrating on China concepts stock listed and attackedby short sellers in the United States, this paper tries to discover the cause, approachand process of the attack. Furthermore, the enlightenment and significance ofestablishing and improving Chinese financial system and securities market trading areto be discussed in light of the mature American securities market. The research worksin this paper mainly focus on the following aspects:(1) The development of Chinese stock market and the history of Chinese stocks werefully introduced. By focusing on the Chinese stocks attacked in the American market,this paper also analyzes the short-sellers and shorting action and process. As shorting can eliminate bad companies, a malicious shorting can have negative impact on theenterprise development and market confidence, and thus a proper understanding ofshorting is of necessity.(2) By combing the existing literature, the domestic and overseas research focuses ofshorting can be obtained. As a result, a way to establish a shorting mechanism suitableto China’s market mechanism can be sorted out, and the market and legal conditions ittakes to establish a mature, effective and healthy shorting mechanism can bediscussed.(3) Based on the study of the shorting mechanism in America stocks market, thispaper is to analyze the status quo, effects and risks of the mechanism, focus onexporting the American market regulation of shorting and finally look for availableresources for our country; the duality of shorting is a revelation that attention shouldnot only be paid to its harmful aspects. In fact, Shorting is beneficial to stock marketby way of eliminating bubbles in the capital markets, so we should bring in theshorting mechanism.(4) This paper concretely analyzed the construction of shorting mechanism inChinese stock market, explored the necessity of the construction, gave some adviceand suggestions from the aspects of legal and regulatory systems.