Inflation Impact On Stock Yield Of Different Industries

Economists and investors are very concerned about inflation. Andthe start point of this issue of many financial economists is to know howto do well in the context of inflation and how to preserve and increasethe value of assets. So this study attempts to analyze the relationshipbetween inflation and the stock market industry returns. And focusedon the performance of the stock market in various sectors under theconditions of inflation and expect to find good investment opportunities.And further study of the industry differentiation phenomenon in Chinasstock market.Firstly, this paper reviews the previous research on the relations ofinflation and capital market yields. And also introduces several basictheories between inflation and stock returns.Then this paper introduces the related concept of inflation, andpathway of inflation on the stock market and analysis of Chinas currentinflation causes.Chapter III the empirical analysis of Chinas stock returns andinflation in the different stock market industry. In this part,we testwhether the Fisher effect hypothesis is right in our stock market throughthe establishment of the regression equation. We use PPI indexyear-on-year rate of change as the rate of inflation. Through theanalysis we can know that the Fisher Effect in Chinas stock market is notestablished in different industries.The fourth chapter is based on the VAR model in different sectors ofthe stock returns and inflation.In this part, we introduce the broadmoney supply, output growth, establish that the four variables vectorauto regression model. Through empirical analysis, we can know thatthe stock returns for inflation, output growth rate and the growth rate ofmoney supply performance is significantly different in different sectors. In the stock market there exists obviously industry differentiationphenomenon. The fifth chapter is the result of the empirical analysis,conclusions are summarized and introduced the simple policyrecommendations.