Research Of The Supply-demand Relationship In China's Stock Market-Based On The Restricted Stock Circulation

China's securities market is an emerging and transitional market, at the equity division status, the supply-demand relationship has not been fully reflected. With the non-tradable share reform been comprehensively instituted, the problems and contradictions arising from the reform associated with the stock market fell sharply have been concerned by the market participants. Particularly, restricted stock circulation is considered as an important pressure because of its large-scale expansion.This paper firstly analyzes the restricted stocks from the scale and types of comprehensiveness, and analyzes the factors why restricted stocks holders sell them from cost, the valuation levels, and so on. Secondly, the paper uses the floating market capitalization as the stock demand to building the model to do a regression analysis based on the data from 1999 to 2008, and involving some variables related with the restricted stock circulation to the model to do regression analysis based on the data from Dec.2005 to Dec.2008. Thirdly, this study calculates the floating market capitalization of Shanghai and Shenzhen stock markets in 2009 and 2010 depend on the data disclosed by CSDCC Ltd., and uses the model to calculate the stock demand.The results have showed that the market expansion pressure mainly comes from the restricted stocks holder's selling behavior and excessive IPOs. It is that expansion outpaced the growth rate of money supply which causes the imbalance of supply-demand relationship. Demand of stocks is mainly affected by money supply, but has not high correlation with economic growth and is not sensitive with the real or nominal interest rates. M0 has significant positive effects, and savings deposits have negative effects on the stock demand. After involving variables related with the restricted stock circulation to the model and doing a regression analysis based on the season data, we find that restricted stock circulation has positive effect on the stock demand in the long run. Economic growth has improved the correlation with stock demand, although it is still in negative band. The real interest rates, nominal interest rates and M1 show a considerable positive effect on the stock demand, and savings deposits have maintained a negative effect on the stock demand.