Study On Relevance Between The Change In China's House Mortgage Policy And Listed Real Estate Company's Stock Price

The main content of this paper is to examine the relevance between the change in China's house mortgage policy and listed real estate companies'stock prices through the method of event study.To promote the reform of house distribution system in China, our government made house mortgage open to the public in the middle and later of last 90's. In the process of the reform, the house mortgage played a key role in the transform and our government has been taking the house mortgage policy as the most important tool for its control on the housing market. However, it would take a long time to testify the effectiveness of an adjustment in house mortgage policy to the real housing market. So, in short term, could we have a way to observe market's response and expectation to a house mortgage policy change? China's Stock market might be a choice but further examination is necessary.As of now, China's stock market has experienced development of nearly 20 years, with over thousand companies listed, among which real estate companies are also amounted more than 100. Based on the Semi—Strong Form Efficiency theory, China's stock market should be theoretically qualified for us to observe market's response and expectation to a house mortgage policy change.The paper applies the event study method to examine the relevance between the change in China's house mortgage policy and listed real estate companies'stock prices with two representative house mortgage policy changes during the period from 2008 to 2010 as event and it is concluded that: -- in terms of the real estate segment of China's stock market, the response of related stocks'price to house mortgage policy change supports the Semi—Strong Form Efficiency theory;- the price change of real estate related listed companies'stocks is in compliance with the meaning of selected house mortgage policy change.