Research On The Efficiency Loss Of The Security Market In China

On June 6th, 2006, Shanghai compound security indexes plunged below 1000 point, the so-called"iron bottom", less than a half of the highest 2245 point in history, which renders deep reconsideration .After that, in the atmosphere of good policies, the stock market experienced an increase of 8.21% on the day of June 8th,known as the"June Eighth Market". There are more and more discussions on the stock market and emerges the analysis of the operation effectiveness of it, with the ups and downs of it and the reform of the stock ownership. However, there are few analyses of the loss of the security market in China. In China, the stock market is characterized with the institutional defaults and administrative interference, so judging the efficiency only from the information aspect is improper and inaccurate. Instead, this essay is trying to analyze the efficiency loss of Chinese stock market from the aspects of the management supervision.From the very beginning, the stock market was designed to solve the problems of the SOE (state owned enterprises), so series of polices are made to meet the needs of the SOEs, rather than make sure the stable and sound development of the stock market. Obviously, the stock market has policy support, which not only hampers its normal operation, but also gives the investors expectations that the stock market never falls. As a result, the stock market cannot operate with full functions or according to the marketing regulations, so the operation efficiency reduces.This essay is based on the theories of capital market efficiency and financial supervision. As a classic theory, the capital efficiency theory is the basis to analyze efficiency in various markets all the time, while the financial theory provides theoretical support for the governmental interference. Then, this essay gives a brief introduction of the history of Chinese stock market and the development of the regulatory system. After that, it focuses on the stock market.The center part of this essay is to analyze the efficiency loss of the market from the perspective of management regulations. There are two parts in this analysis framework. First, this essay analyzes the negative effect of the"policy market". That is, the stock market is influenced greatly by the policies. The policy market results in the poor function of the finance, resource allocation and the loss of the macroeconomic barometer function and an increase in the systematic risks. The analysis of this part is combined with the current situation of Chinese stock market.At the end of this essay, in hope to improve the development of Chinese stock...