The Analysis Of The Impect Effects Of Hot Money, Monetary Liquidity On China’s Security Stock Markte

With the development of economic globalization, the international hot money flows in or out of China’s financial markets through a variety of channels. Hot money with the huge scale, high degree of liquidity and the profit-driven makes the international financial markets increasingly volatile. As far as our country is concerned, China’s economy continues to open up, and the financial continues to develop, so the impact effects of international hot money on China’s financial market are worth further research. The large number of hot money flows may lead to excessive expansion or excessive tightening of the domestic liquidity, and these will have an impact on the real economy as well as the financial markets, resulting in substantial volatility of the stock price.On one hand, hot money flows will affect our country’s monetary liquidity, and affect the effectiveness of the monetary policy in China. On the other hand, hot money flows first affect China’s financial market, and affect the volatility of the stock price. In this paper, the author regards the stock market prices--stock index as a representative field of financial markets. Hot money, monetary liquidity and Shanghai Stock Index are linked to examine the impact on Shanghai Stock Index by hot money.Besides the use of regression analysis and comparative analysis, the author also establishes the mediating effect model and the moderating effect model to analyze the impact mechanism of China’s Shanghai Stock Index and hot money. First, this paper uses EViews6software to do unit root test and cointegration test, the results show that there is a long-run equilibrium relationship between the monetary liquidity and Shanghai Stock Index, as well as a long-run equilibrium relationship between hot money flows and China’s Shanghai Stock Index. Then compare the analysis results and find that monetary liquidity impact is larger than the impact of hot money flows on the Shanghai Stock Index.On this basis, establish the mediating effect model of hot money flows, monetary liquidity and the Shanghai Stock Index. The results show that hot money flows not only have a direct impact on the Shanghai Stock Index, but also have an indirect impact on China’s Shanghai Stock Index through the monetary liquidity. Thus the monetary liquidity is regarded as a mediator. The results also show that the ratio of the mediating effect and the direct effect is935.09%, and the mediating effect out of the total effect is90.34%. So the mediating effect is significant.Finally, establish moderating effect model. The results show that the moderating effect of monetary liquidity on hot money and Shanghai Stock Index is not significant. The main effect of monetary liquidity on the Shanghai Stock Index is significant, that is to say changes in monetary liquidity will cause changes in the Shanghai stock index. However the moderating effect of monetary liquidity is not significant, changes in monetary liquidity will not change the impact of hot money on Shanghai Stock Index.This paper ultimately concludes that hot money flows will first affect our country’s monetary liquidity, which in turn will affect our country’s securities market. Monetary liquidity plays a moderator role in the mechanism of hot money and the Shanghai stock index. Monetary liquidity can help relieve and mediate the impact of hot money. The effects of hot money on China’s security market is not so significant as we supposed, China’s central bank is fully capable to have a hedging control of hot money through domestic monetary policy to stabilize our securities markets.