A Stock-Market Overall P/E Influencing Factors Positive Analysis

An essential basis for judging the stock-market's value, risk and reward, P/E is also a key standard for deciding whether the stock market is healthy. As an import reference index for investing and government adjusting of the stock market, P/E is widely and deeply researched both domestically and abroad.Based on the theory that macroeconomic factors influence the long-term trends of the stock market, this thesis firstly classifies and sums up the influencing factors; secondly presents the effective mechanism on theoretical aspect; and then proposes corresponding hypothesis after choosing reasonable factors according to the association they have with the stock market.In the thesis, the P/E of Shenzhen Stock Market and Shanghai Stock Market from Jan. 2005 to Dec. 2009 is analyzed with econometrical model systematically. Through the analysis, fourteen factors are found to be related with the Shanghai stock market and fifteen factors are found to be related with the Shenzhen stock market. After the multiple regression, a high degree regression model is established. The country's financial revenue growth and the growth of M1 are included in the P/E model of the Shanghai stock market. The country's financial revenue growth and stamp duty on stock transfers and the growth of M1 are included in the P/E model of the Shenzhen stock market. The equation of P/E is deeply explained in this thesis.