The Influence Of The International Short-term Capital Flows On Our Stock Market

After the economic crisis in 2009-2009, the United States has implemented a round of quantitative easing monetary policy, nowadays there are still many other countries in the implementation of quantitative easing monetary policy. This article use the method of qualitative analysis and quantitative analysis to discuss the concept of international short-term capital flow and the influence on Chinese stock market during 2009-2013.There are four variables including short-term capital flow, the supply of base currency, the Fed’s federal funds rate, the Shanghai composite index, these four variables are first-order single whole stable,there are four cointegration relationship between the four variables. The granger causality test shows that the international short-term capital flow, the supply of base currency, the Fed’s federal funds rate are the granger reason of Shanghai composite index and variance decomposition shows that the international short-term capital flows have great influence on Shanghai composite index. The quantitative easing monetary policy of the United States influences the international short-term capital flows through the supply of base currency, then it will affect the Shanghai composite index, the supply of base currency, the Fed’s federal funds rate, and the short-term capital flows are factors to affect stock price in our country. During the period of the implementation of quantitative easing monetary policy, the fed funds rate is at a low level, and there are a large number of monetary base in the market, part of the short-term capital flows to the stock market in China to threat the development of financial market in China. For a healthy development of Chinese stock market, we should strengthen the supervision of the international short-term capital flows, keep the RMB exchange rate stable, push forward RMB internationalization steadily to ensure the healthy and stable development of Chinese stock market.