The Research Of SME Board Structure And The Investment Strategy Based On Complex Network

With the deepening of globalization, economic competitions are increasinglyfierce. The stable and healthy development of financial markets is of more meaning.As an major component, the stock market triggered more attentions. After years ofdevelopment, Chinese security market has been more complete in the regulatory,institutional and scale aspects. The open of SME board in2004is eventful. In recentyears, the number of listed companies increases rapidly. As an important platform forthe growth of high-tech enterprises, the backbone of the national economy, animportant force to ease employment pressure, the reseach of its internal operationmechanism, personality characteristics, structural properties, investment efficiencyissues becomes urgent. But most studies focused on the main board of the Shanghaiand Shenzhen markets. Studies for small plates market are penurious, this article isdedicated to a more in-depth research in this area.Since the birth of graph theory last century, complex network theory has asustainable development in various fields. For its effectiveness in wide ranges, themethod is favored by numerous scholars. The economic management has also begunto use this tool to conduct research on market structure attributes. Using the theoryto model and analyze the stock market can grasp the market structure at a more macrolevel, abandon the trivial details, thus bring some information that the other methodscannot analyze. The complex network theory brought us a new perspective inconducting SME market research.This article selected the date of stock return rate from January3,2011toDecember30，2011total of424stocks of SME composite index to build a complexnetwork. We analyze the nature of this network to understand the law of the SMEmarket volatility and its structure characteristics. Furthermore based on communitydivision theory, divide the SME market into clusters to find the optimal communitystructure. With a combination of risk and the degree of the stock, we innovativelypropose a more simple and effective portfolio strategy for the majority of investors.Finally based on the article, we give our suggestions both for the regulators andinvestors.