Research Of Bubbles In Chinese A-share Market & Feedback Trading

Stock market bubbles are momentous financial events that are fascinating to academics and practitioners alike.Historical experiences teach us the break of bubble could be the disaster of economy of one country and lead to financial crisis.So it is of great significance to maintain financial stability and promote economic development that we know how the bubbles generate,how they exist,how to test them,and how to prevent and suppress the bubbles.This paper tends to answer the three questions we mentioned below.And we hope the answers to such three questions will bring the right advises to the stability and development of our stock market.The three questions are listed below.First of all, the research methods and areas of research range are so much,which we will use to analyze the process of bubbles generation and burst.Secondly,what are the reasons of the bubbles generation and burst in Chinese A-share markets,and empirical test whether or not to support such reasons.Thirdly,what about the situation of relative scale of the bubbles in Chinese A-share markets.At the basis of the results of previous studies on stock bubbles,combined with the facts of Chinese A-share markets,we modified the assumption of hybrid-rational model of speculative bubbles and added the description about the bubbles how to burst.The model shows a bubble may occur when the investors' interaction is influence ed by optimistic news when there are positive feedback traders.Our empirical evidence shows that positive feedback traders are present evidently.We get the result that positive feedback trading is asymmetric in Chinese A-share stock markets,it is more evident after the price fall than the price rise.Basing on the results of measure,we know that in Shanghai and Shenzhen A-share markets the relative scale of bubbles and its trends.Finally we use those conclusions to give some advises to Chinese A-share markets.