Study On The Effect Of Lifting The Ban On Non-Tradable Shares To A Share Market

The Split-share Structure Reform has made it possible for unlisted shares to enterthe secondary market gradually, which helps Chinese A-share market undergo a fullcirc ulation. However, asa result of design problemsofthe reform atthe beginning, lifting the ban on non-tradable share has become a big trouble which affects the development and stabilization of Chinese share market. Although, at the end of2011, lifting the ban on non-tradable share will be completed, the proportion of non-tradable shares lessening is very low. There will still be the risk of fluctuation of the stockprice because of non-tradable shares lessening, and some new problems, such as new insider control, hostile takeover and so on. Therefore, studying the effect of lifting the ban on non-tradable shares to A share market is helpful to standardize non-tradable share lessening and perfect the market mechanism, which has a very important significance.The passage is studied by theoretical and positive analysis to explain the influence of lifting the ban on non-tradable share on Chinese share market. Through game analysis of the non-tradable shareholders and tradable shareholders, this article concludes that:in the equilibrium market and the bear market, once lifting the ban of non-tradable shareholders, non-tradable shareholders will choose to reduce. In a bull market, because the game has two balanced solutions, non-tradable shareholders may choose to reduce, ornot. In c o nc lusio n, the probability of reducing non-tradable sharesis very large, and once reducing, it often can make the share price decline, especi ally i n the bear market. Stock supply exceeds demand, whi chmay make the stock pri ce fall conti nuously. Based on theoreti calanalysis, the paper builds classical Accumulative Effect Model throughmonthly time serious data si nce October2006. By applyingmulti-regression analysis this paper studies the degree of influence oflifting the ban of non-tradable shareholders on SSE Composite indexmonthly return. Econometrical result proves that the current effect oflifting the ban on Non-tradable Shares is positive but the accumulativeeffect is negative. Furthermore, the paper proves that the problem oflifting the ban on non-tradable share is indeed a unique factor to affectA share market because it does not affect stock market in Hong Kong.Finally, we draw the conclusion of the paper and put forward therelated proposals.