| On October 28, 2003 the State Council issued the Law on Fund Securities Investment. This marks a milestone for China s development of fund investment market, and it has achieved great progress in a short period of time. By the end of 2010, over 60 fund investment companies were had been established, with over 700 public funds, their total scale value more than RMB 3 trillion. The value of stake funds now has reached RMB 2 trillion, which is 11% of the market capitalization. With the scale of fund business increasing, the regulation of funds is now paid more attention. The efforts made for regulation is playing an important role in the capital market. The regulation offers wider investment channels for small and medium investors, absorbs social funds, and gurantees the healthy stability and development of the securities market. What s more, it is playing a bigger role in the internationalization progress for China s securities market. China s financial market is in its infancy. Neither its market mechanism for its operations nor the laws and regulations are ready for functioning. In this grim market reality, the fund managers at the operation level are restricted in terms of their independent thinking and rationality. And their style and personality of business operations are affected by many uncertainties, which turn out to be various irrational behaviours. These irrational behaviours are not explained by traditional finance theory, while the behavioural finance offers a reasonable answer. The herd behaviour is a key point for behavioural finance. The study on the herd behaviour of fund securities will be not only very beneficial for knowing the behaviours of investors in the market, but also good news for the government watchdog for policy reference.Firstly, this thesis has laid its research purpose, based on which, it furthur generalizes and summarizes the theoretic essence and realistic proof from both home and abroad. And it has established a good structure for the whole thesis. Secondly, the thesis generalizes the relevant theories on the herd behaviour, which mainly focus on the categories of the concept, the inner mechanism of the behaviour formation, and the influence the behaviour has on the market. With this serving as its base, the thesis makes a summary on the methodology of empirical study on the herd behaviour. One category of this methodology is to study how the herd behaviour has its impact on the stock prices, while the other is to study the gregariousness of the decision-making by the institutional investors. The fourth chapter is an analysis of the empirical study for the whole thesis. Using an industrial polymerization strength model, this chapter adopts the fund securities investment data generated from the sell-short mechanism around a year to measure the herd behaviour at the market. The research finds out that there are herd behaviours both before and after the sell-short mechanism, while the heard behaviour after the sell-short is on the decrease. Meanwhile, this chapter analyzes the connections between the herd behaviour and the fluctuation of market indexes, and has made comparisons between them. The various degrees of influence from the sell-short mechanism are found through the sampling analysis of the market data. One of the results is that the herd behaviour of the insurance sector is on the decrease, while others on the increase. The research also finds out that the percentage of the sell-short equity over the total equity of the industry has a certain degree of influence on the herd behaviours of the whole market. Finally, the thesis makes a furthur reflection on the reasons triggering the herd behaviour in China s fund and securities market, and suggests relevant governing policies. These policies are made for investors and government watchdogs for reference. |
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