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Research On The Influence Upon Stock Market By The Selling Of Non-tradable Shares After Non-tradable Share Reform

Posted on:2010-04-29Degree:MasterType:Thesis
Country:ChinaCandidate:Z LiFull Text:PDF
GTID:2189360278972954Subject:Finance
Abstract/Summary:PDF Full Text Request
Non-tradable share reform occurred in 2005 is a major change to China's capital market. It ends the state of share-splited, and grants the stock market functions of financing, pricing and allocation of resources. The stock market has become the "barometer" of real economy. And with rapid development of China's economy, there was a major bull market. At the same time, it can serve for the real economic better. The efficient capital market provides a prerequisite for a series of problems, such as optimizing the structure of corporate governance, broadening the financing channels for enterprises and optimizing the allocation of state-owned capital.It is reasonable to evaluate the Non-tradable share reform in 2008, as the fact is the only criterion for testing policy. The sub-loan problem in USA has cause the most serious financial crisis since the 1930s. The world economy has transferred from high inflation into a major recession. Although China's economic vitality and the internal political system of special factors make our country has stronger resistance, it is also inevitable to get rid of affection. When the tradable shares after the non-tradable share reform encounter serious macro-economic situation, some problems are exposed. The stock indexes of China fell nearly 70% from the high-point in 2007, which is the widest range in the world.A question emerges, whether there is a loophole in the Non-tradable share reform. In this paper, I claim that the Reform is a success by comparing the features of capital market before and after Non-tradable share reform. No-tradable shareholders of small size, whose wish to sold the shares is stronger than that of big size, is the source of pressure of the stock market. The demanding-curve for shares is different from that for normal goods. There is no mechanism to make the market in balance through conditioning price. Most investors, who are Irrational, always avoid any loss in the any minute. Non-tradable shareholders of small size are a kind of the above investors, whose behavior leads to the instability of the stock market. In this paper, I prove that the three factors affecting the stock market mostly are International economic situation, the sale of restricted shares and Domestic economic situation. With some econometrics Analysis, I get that there is approximately 7% falls of the stock index after 10 trillion no-tradable shares are out of ban.How can we make up the loopholes left by non-tradable share reform? By the comparison with other countries' experience, I think the loopholes lies in the limited period and the failure in the construction of institutional investors. In this moment, the most important task is to keep our country's economy healthy and fast-developing. Then the stock index will also return to a reasonable level. But this process must be hardship and a long term. So I advise to launch a Stabilization Fund to balance the supply and the demand in the stock market. Also I devise the specific program for the Stabilization Fund.
Keywords/Search Tags:non-tradable share reform, non-tradable shareholders, loss aversion, stabilization function
PDF Full Text Request
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