The Impact Of Economic Policies And Psychological Expectations To The Stock Market

The stock market has been an important channel for business groups and people to investment and financing.As an important part of the capital market,its development and perfection has always been important to ensure stability in the country's economic development.It contains issue market and distribution market in two parts.The company by issuing shares to the public,a lot of money quickly focus,achieve economies of scale on production.Social idle funds by investing in Joint Stock Company seeking to add value to wealth.The stock market is not a disembodied virtual market,but has important links with the real economy.By national regulatory policies we hope to make the stock market run at a reasonable track,but the introduction of some of the policies did not achieve the desired results.Previous studies,various experts and scholars put forward various views,some say will lead to changes in macroeconomic variables change in the stock market,there are some considered unrelated.For the role of psychological expectations,experts and scholars also hold different views.Chinese stock market is not yet a fully mature market,and therefore subject to outside influence more apparent.2014-2015,China has experienced a rapid rise in stock index.Low of 2279.84 points from October 27,2014,rose to a high of 5178.19 points June 12,2015,only use about 8 months.It rose 127%.The rapid appreciation of the stock in the hands of investors,also made the stock market with this round of skyrocketing more popular.But this round is made up of unhealthy,high-risk leveraged finance-driven,so it resulted in a large range and dramatically plummeted.In this case,the paper respectively daily data and monthly data for analysis,and to distinguish between policy variables and psychological expectations,then concluded.Day of the data included in the benchmark Shanghai Composite Index,between 7 days interbank offered rate,The exchange rate of RMB against the US dollar,the S&P 500 index.In which the S&P 500 index as a variable psychological expectations,because it will lead to changes in people's expectations for the future Shanghai Composite Index,the other variables as policy variables.Monthly data includes Shanghai Composite Index monthly data,broad money M2 growth,investor confidence index.Investor Confidence Index which is investor expectations for the future market,as expected psychological variables,others as policy variables.First on the positive Composite Index and S&P 500 index statistical description we find that they are leptokurtic,fat tail,and the skewness is greater than zero.This shows that the Shanghai Composite Index and the S&P 500 index yield are right side,this means that in the market the negative yield longer duration,"bear market" sustained are often longer than the "bull market".Through the Shanghai Composite Index logarithmic return rate GARCH modeling and correlation analysis using least square method,we found that the psychological effects of changes in the stock market is expected to more obvious,whereas other changes in policy variables for the stock market not obvious.Where the interest rate and the Shanghai Composite Index on the relationship between the number of expected rate of return although the same as a negative,but the correlation is very weak,this relationship does not hold the reverse change.By observing the reality of the stock market,we found that in the second half of 2015,the Chinese stock market has undergone major changes in the "crash",the various policies are not effectively transmitted to the stock market,and even national direct use of huge amounts of money into the market "rescue" is also not very success.The reason is because the pre-crash and all the rumors making the pessimistic investor sentiment,then the investors no longer willing to invest in the stock market.Chinese central bank lowered the reserve ratio and the interest rates several times,in this particular case also did not play a major role.But some unrealistic media coverage making the already fragile investor confidence more worse,resulting in the stock market crash intensified.This also reflects the influence of the psychological expectations to the stock market.For this conclusion,the paper concludes with policy recommendations on how the use of psychological expectations of investors out and control the market.For develop policies,have to consider the impact on investor psychology.