The Correlation Study Between The Open-end Securities Investment Funds And A-Share Stock Market Volatility In China

The impact of the securities investment funds on the stock market fluctuation hasbeen a research focus by scholars in China and abroad. The fund industry in China hasexperienced a rapid development, whose impact on the stock market has boththeoretical and practical significance.Firstly, we analyze the principles of the role that the fund played on stock market fromfour aspects: market conditions theory, rational people theory, trust-agent theory,portfolios theory; then, we construct econometric models and take703equityopen-end funds as study samples to study the impact of the following variables: thefunds’ holding ratios, the ownership concentration ratios, the net redemption rates, thegrowth rates of the stock value held by the funds and the rates of change in the flow offunds into the stock market.The main conclusions are: the funds’ holding ratios, the ownership concentrationratios are positively correlated with stock volatility; the impact that the net redemptionrates of the funds, the growth rates of the stock value held by the funds, the rates ofchange in the flow of funds into the stock market of the funds are not obvious, but thelag phase of the rate of the volatility of stock index are obvious. Based on theconclusions of this paper, the fund industry in China should adopt the policyreformation such as expanding the scope of investment, advocating value investment,strengthening supervision and encouraging innovation, etc.