Study On Supply-demand Relationship Impact On The Chinese Stock Market Price Fluctuation

With the improvement of the status of China’s stock market compared to thefinancial market， the impact of the volatility of stock market to the macro-economicimpact has been subject to the attention of management and academia as there is bigdifference no matter in terms of the amount of participants， or listed companies inChina’s stock market. In this paper， according to the current situation of stockmarket， we studied the transmission mechanism between the stock market andmacroeconomic through testing and investigating the impact factors of volatility ofstock market. Additionally， we gave some policy recommendation related tostandardize the market， revealing the far-reaching impact of the stock marketfluctuations to the macro-economy.From the perspective of market equilibrium theory， this paper specificallyexplains the main factors affecting volatility of China’s stock market. The study foundthat the relationship of supply and demand is the critical factor in the pricefluctuations of the stock market. When we see stock as a special commodity and toanalyze it in the view of demand and supply by building the model of the proportionalrelationship between the relative change rate of the stock price and the gap betweenstock supply and demand， we can come up with the simplified form of thesecond-order differential equations by combining demand and supply of stocks.Finally， we could get important factors to effect the stability of China’s stock marketand the vital conditions to guard against the wide fluctuation of the market with thestability conditions of difference equations. The stability of the equations constitutesan important condition to achieve the balance between supply and demand on whichthe whole study in this paper based. In this paper， taking China’s ShanghaiComposite Index as the sample， based on CSMAR Info data， we used multiplelinear regression methods to test and corroborate significance of the influence factors.After summarizing the research ideas and conclusions，the essay gave the policy recommendation to stabilize the China’s stock market and guard against the widefluctuation， giving a new research ideas and proper explanation.At last， there is asummary and analysis of the lack of this study and directions of future research.