The International Oil Prices’s Impact On Chinese Stock Market

As an important energy and raw materials in the modern industry, petroleum is critical for a country’s economy development. Accompanied with Chinese rapid economic growth, the petroleum demanding is growing. Chinese oil consumption in2009accounted for10%of global oil consumption. Since2003China become a net oil importer for the first time, China’s dependence on imported oil is rising, the latest data show that China’s dependence on foreign oil has reached about58%in2012. At the same time, the international oil price has experienced a period of volatility, the price of international crude oil prices was30U.S. dollars/barrel in2003, then soared to the highest level of＄147U.S. dollars/barrel in2009;and then accompanied with the global financial crisis, international oil prices fell to60U.S. dollars/barrel, and quickly climbed back above＄100/barrel. Given the uneven development of the global economy, the oil reserves unevenly distributed, the characteristics of the volatility of the international oil prices will continue. In this environment, as a barometer of a country’s economy, the stock market is bound to be affected by the impact of fluctuations in international oil prices. How the path of the international oil prices impact on China’s stock market is like? Specifically in our unique market environment.This paper summarizes the research scholars for the oil price shocks. The predecessors analyzed that separately from the impact of international oil prices and fluctuations on a country’s economic growth, inflation, macro monetary policy and the stock market. Derived from the macro level, the oil price shock will cause economic recession, rising unemployment, inflation, as well as the tight and cautious monetary policy; from microscopic perspective, in some studies the stock prices have a significant negative impact on the stock market, but some other studies suggest that the negative impact is not so significant; And another studies have pointed out that the impact of oil prices on the stock market exists asymmetric effect; studies also found that there is a certain relationship between the volatility of international oil prices and the yield of the stock market. From the previous studies, we summed up the research method in the empirical research as a reference this article.This paper analyzes the mechanism of fluctuations of international oil prices and its impact on economic variables. We analysis the inherent reason of the fluctuations in international oil prices from the supply and demand, respectively, consider the distribution of the location of the oil-exporting countries, market structure and the cost of production of oil exploration. The oil price is determined by supply and demand. The oil supply is subject to market microstructure, the impact of the economic reserves of petroleum, petroleum production costs and other factors; the demand by the impact of the global economic development, but also by the tax, petroleum alternatives-new energy. Through this part,we have a general understanding of the determinants of oil prices and macroeconomic variables which can have affect and also a preliminary understanding of the impact of oil prices on the stock market which can be guidance for the variables selected.Based on the two parts above, we are going to use empirical research method to study the impact of international oil prices on China’s macro-economic and stock market. In model selection, drawing on previous experience and the advantages of each model comparison, we chose SVAR (structural vector auto regression) model; learning from previous studies in terms of variables selected, the impact of the relevant factors to consider in international oil prices, we final select the short-term interest rate (rf), the international price of oil (wti), industrial added value (indu),and the Shanghai Composite Index (sz) four variables as empirical objects, that short-term interest rates represent monetary policy, the industrial added value represent the economic growth, the Shanghai Composite represent the stock market. After a seasonally adjusted, the industrial added value and variable stationarity test, importing SVAR model, we find that the adverse impact of the draw oil prices for the Chinese stock market are not so significant as expected, and the impact on the stock market there is no non-symmetrical effect; oil price volatility can explain to some extent the changes in stock returns. We also found that the split share structure reform has played a very important role to improve the effectiveness of the stock market.Finally, on the basis of empirical research, the paper proposes a number of policy recommendations, including:speed up the construction of the oil futures market; improve the domestic oil price quotation system; consolidate the results of the split share structure reform, in order that China’s stock market to truly become a barometer of China’s economic; accelerate the adjustment of industrial structure, vigorously develop the tertiary industry; adjustment policies tend to preserve the Chinese petroleum enterprises "going out" strategy; great efforts to develop new sources of energy, the development of alternative energy that minimize dependence on oil.