The Relation Between Chinese IPO Market And The Securities Market

The main function of the IPO market is financing, corporate enter in the securities market after IPO. IPO market and the securities market complement each other. There is a strong mutual influence between them. In the studies of the IPO market impacting the stock market, there is "expansion curse" hypothesis, based on the classical asset pricing model and the theory of supply and demand, that stock market expansion is a bad news, high finance will lead to unilateral market decline. Meanwhile, in the studies of the securities trading market impact the IPO market, based on investor sentiment theory, market timing theory and the IPO cycle theory, that wholesale funding are often in a bull phase, the financing rhythm is also accelerated when the secondary market trend is better.In this paper, using methods of the VAR model and impulse response function analysis, we analyze the relationship between the Chinese IPO market and the securities market, and to contrast with the U.S. market. As the issue of Sino-US regime, market characteristics is different, the relationship between IPO market and the securities market are quite different. Through our market segmentation study found that in the primary market impact on the secondary market, in a bear market phase there is "expansion curse" in Chinese stock market, and is not significant in a bull phase, but the amount of financing didn’t impact on the index in the U.S. market; In the secondary market impact on the primary market, during the bull market phase, the rhythm and frequency of Chinese stock market IPO financing was significantly accelerated, while in the bear phase, the impact is not significant, while the U.S. market situation is just the opposite.