Research Of Chinese Stock Market's "Barometer" Effect On National Economy

In October 2007, the Shanghai Stock Exchange (SSE) Composite Index hit a record of 6,124, and then the tendency was reversed. The macroeconomic data showed that the economy was improving, whereas in the succeeding years it proved that China's economy at that time was overheating. The stock market is a barometer of the economic development in China. In November 2008, the SSE Composite Index rebounded and had surged up more than 90% by August 2009. At the same time, macroeconomic data restored investors'confidence. It was not only a reversed sign of the index, but also a signal of economic recovery. Again the stock market acts as a barometer. A-share market index has plunged at an alarming rate since May 2010. The index fluctuated, and the economic conditions were unsettled. The fluctuation of the stock index as a "barometer" is a warning signal of the short-term economic changes.As the economic structure improves and the stock market gradually matures, it is becoming increasingly clear that the stock market as a "barometer" has an affinity with the economic situation. Besides, the advance of the stock market plays a certain of reference value in the policy-making. Therefore, it is important to make research of the role as a "barometer" of the stock market.There are five chapters in this paper.Charterâ… claims the background and meaning of the research, meanwhile, it summarizes the domestic and foreign studies. Also, it points out the superiorities and inadequacies of the paper.Chapterâ…¡claims the relation between the stock market and the national economy. In the analysis of the fact that national economy promotes the development of the stock market, the paper uses some commonly-used indicators as GDP, besides, for the considertion of innovation, it uses some closely-combined indicators as CCI,PMI,BDI,stock technology and power generation to reflect the national economy and the stock market. In the analysis of the fact that the development of the stock market promotes national economy, the chapter illustrates from two sides, and cites the trend of some representative shares.Chapterâ…¢is the mian part, and it expounds the role of the stock market. Firstly, it describes the status of the stock market, including the size and regulatory conditions. Secondly, it analyzes the performance of the role as a barometer. Finally, it researches the failure of the role as a barometer, including the performance and the causes of the failure.Chapterâ…£makes a comparison of the function as a barometer in the stock market in the world. It does some research of countries, such as USA, Japan and EU. And then, it puts forward some policy recommendations.Chapterâ…¤makes some conclusion: 1.The role as a barometer of the stock market exists, but sometimes it fails; 2.The stock market in China is not mature enough to fuction as the role of barometer; 3.The stock market and the development of national economy are closely-linked, although they can not be synchronized, the basic trend is the same, and the stock market works 6 months ahead.