The Empirical Research Of The Relationship Of China's Stock Market And Real Estate Markets

The stock market is most likely to create bubble on the virtual economy area while the real estate market create bubble on the real economy area, the two have always been an important carrier of the risk of accumulation. Previous overseas experience shows that real estate price bubble and the stock market turbulent exists a high degree of contact and this link will be up to speed up the bubble burst, lead to serious consequences to the economy as a whole or even a recession. China is now improving the market economy system in the special period, the study of the intrinsic link between the two has great significance for the government's macro-control and allocation of portfolio investors.First of all we have theoretical analysis on the affect relationship between the stock market and real estate market,including:the ups and downs in stock prices in what degree reflect people's wealth, the impact of changes in the number of its expenditure, particularly in the housing expenditure in China is very important respect, it directly related to demand conditions on the property; Similarly, for real estate enterprises, stock prices respond to changes in market value of real estate business, it can be analysis by Tobin's q value and corporate investment, as well as the wealth effect and the substitution effect which directly affect the supply of real estate. Residents of real estate is an important asset, when the real estate market fluctuations and thus create fluctuations in asset prices, people's Stock of wealth changes, thus directly affecting the people's income distribution and lead to gap between consumer spending and consumer decision-making, thereby affecting the total demand and economic growth. The stock market is virtual economy, which is a barometer of the real economy, it changes with the real economy.Therefore, the inevitable result of economic growth is the corresponding changes in stock market.In the part of the empirical test, we select the National and the top ten housing cities concluding Beijing, Shi Jiazhuang, Shanghai and other cities sale price index for a sample to study the relationship to the Shanghai Composite Index. The data is quarterly from 1999 to 2008,using vector autoregressive test, Granger causality test, Johansen cointegration test for empirical analysis concludes that:Both the short term and long-term in China's stock market and real estate markets are strongly correlated, while real estate markets'impact on the stock market has a strong lead role, the stock market in guiding the real estate market is relatively in a weak role. This conclusion is also in line with China's stock market and the operation of the real estate market.