Research In Changes Of International Capital Flows And The Influence In Stock Market

It is a situation that International capital flow place great importance on acountry’s economy and finance. With market openness deeper and deeper, thestructure of international capital changed a lot. Recently, the distribution structure,finance structure, capital structure, currency structure, and term structure ofinternational capital turned into new face. More and more capital flows choose togo to low income countries, debt finance got main position in the InternationalSecurity market, direct investment decrease and in term structure, long-termstructure is instead of short-time structure because of creativity of finance product.What’s more, invest structure influence the most countries’ balance of payments anddomestic economy. For the stock market, different countries got different results. Forthe security market, influences vary in all aspects.To study the relationship between international capital flow and the change ofcapital flow structure to the security market, this essay chooses practical andtheoretical ways. It illustrates that international capital flow will impact on interests,risks and invest instruments of a security market. What’s more, portfolio investInternational capital flow will boost a country’s security market from thecross-sectional model. Otherwise, short-term capital flow will make the price of acountry’s stock market fluctuate. According to the conclusion of cross-sectionalmodel, a change in portfolio will expand security market. However, the results ofchanges in international capital investment structure varies because of differentcurrencies, high internalization will lead to high indirect invest and lowinternalization will get high direct invest. Then, based on those findings, I studycapital structure changes in China. Considered that China has been experiencingthose changes, to study the influence in stock market will benefit China.