A Research On Fundamental And Technical Co-valuation That Based On Chinese Stock Market

The issue that how the price of a stock is determined and what factors are relatedto the price has been drawing widely concerns, both in academic and investment fie ld.The existing ana lys is of stock price, on one hand, is ma inly b ased on the funda menta lsof a firm, whic h is called Funda menta l Ana lys is, on the other hand, centers onanalyzing the trading time-series, which is termed Technical Ana lys is. Thus eachgenre has its emp hasis, strengths as well as weaknesses. For insta nce, Funda menta lAna lys is is be lieved to have a comprehens ive consideratio n on the company’soperation a nd intrins ic va lue, but the market price forecast accuracy is relative ly low.In contrast, Technical Ana lys is can precisely predict the trends of the securit y price,but it lacks deeper consideration for the causes o f such trends. There fore, it isnecessary to comb ine Fundamental Ana lys is and Technica l Analys is together so as toretain their advantages.In this artic le, funda menta l va luatio n model and technica l va luation mode l arefirstly ra ised in order to comb ine both mode ls together to make afunda menta l-technica l va luation model re ferring to Bettman’s (2009) method.Secondly, the essay discusses the factors influe ncing China’s stock market priceinc lud ing non-outstanding shares and IPO overva luation. Both o f the factors arecons idered in the funda menta l-technica l va luation model. F ina lly, a ll the securities inChina’s A-share market from2002to2011are selected to exa mine that whether thefunda menta l-technica l valuation model can better expla in the pric ing of the stock. Theresults show that Funda menta l Ana lys is, as well as Technica l Ana lys is, haveincreme nta l expla nation for stock price. That is, the fundame ntal-technica l va luationmodel is s ignificantly better in exp laining the determinatio n of stock price tha n e itherfunda menta l va luation mode l or technica l va luatio n model. Also, the two factorsmentioned above are also significa nt, suggesting that investors should consider theimpact of no n-outstand ing s hares and IPO overva luation in investment. In s ummary,the stock price in China’s market is better ana lyzed by applying thefundamental-technical valuation model.