| During the global financial crisis in 2008,the "four trillion" economic stimulus policy adopted by the Chinese government,while alleviating the decline of the economic growth at that time,solved some of the economic problems in the society,it also produced many new problems.After the crisis,China’s economic growth is still slowing down,but also there have been some new problems,such as some industries have serious overcapacity,some of other industries financing difficulties.Since the 18 th Congress of the Communist Party of China,formed a new economic policy system with the new normal concept of economic development as the main line of supply policy reform,and guided the economy towards higher quality,more efficient and more sustainable development.In this process,the excessive use of financial leverage and other reasons,but also produced some financial asset bubble,in June 2015 China’s A-share market,the latest round of the stock market bubble burst,not only deeply hurt the majority of investors,but also disturb the economy development and impact of the development of macroeconomic policies.In the context of the Central Political Bureau meeting in 2016,the slogans to curb asset bubbles and to prevent systemic risks were put forward.In this context,it is necessary to strengthen the monitoring and prevention of asset bubbles.Every investor in the market is a rational economic man was assumed by traditional effective market theory.The rational economic man means he or she can make judgments on the various information about the stock on the market and then make a sale or buy.Those finally determines the price of the shares.But many scholars’ research have shown that the distribution of stock returns in the stock market in most countries has the characteristics of spikes and feathers,and some non-linearity,some scholars put forward the fractal market theory under the non-linear thinking.Fractal market theory that the market uneven dissemination of information,while the degree of investment acceptance and response there is a difference,not a simple linear relationship,making the stock price is not a true manifestation of the relevant information,the final stock market yields Linear.The market is not always balanced,because the market has positive feedback and self-similar characteristics,making the price fluctuations have a certain order and yield with long-term memory.The existence of positive feedback and the existence of fractal features in the stock market,are the main reason for the power rate distribution.While the positive feedback caused the herding effect,it also the reason for the market bubble.From a physical point of view,the bubble is a self-organized critical system.At the self-organized critical state,the arrival of the critical state does not change due to the change of the initial condition.When the system is in the critical state,the magnitude of the internal event and the fluctuation frequency have a power function.The stock market in the imitation of different investors follow the trend,and ultimately will form a consistent behavior,which will eventually lead to the stock market bubble generation and rupture,which is the stock market in the self-organized critical.Based on the fractal theory,this paper studies the development process of stock market bubble as a typical phenomenon of critical self-organization in nature.In this paper,we first introduce the theory of traditional effective market and its shortcomings.In view of the shortcomings of the effective market theory,scholars put forward the fractal market theory,and the non-linear fractal theory is related to the self-organized criticality of nature,using Logarithmic Periodic Power Law Model to predicate the bubble of Stock Market,which was usually used to predict volcanic eruptions and earthquakes After the introduction of the above theory,this paper also introduces the method of solving the parameters of the logarithmic periodic power law model and the genetic algorithm used in the solving process.Finally,the logarithmic cycle power law model is used to test the Hong Kong Hang Seng Index and the three major stock indexes in the Chinese mainland market in recent years.Through the empirical analysis of the bubbles in Hong Kong’s Hang Seng Index,SSE Composite Index,Shenzhen Component Index and GEM Index,it has been found that the bubble process in Hong Kong’s Hang Seng Index,SSE Composite Index,Shenzhen Component Index and GEM Index can be well fitted by log periodic power law model,and the critical time point predicted of the bubble burst is almost the same as the real time,so it is considered that the log periodic power law model can predict the stock market more accurately.Combined with the log periodic power law model on the stock market bubble collapse or inflection point of the critical point of prediction,pointing out that in some cases,the stock market is predictable.According to China’s unique socio-economic system and the distinctive stock market,this paper also gives some simple policy recommendations: the first to implement a smooth and continuous economic policy to reduce the policy changes making the stock market intervention.Second,we should strive to create an open,fair and justice market environment,to enhance the timeliness and accuracy of information dissemination,reduce market information asymmetry.Third,strengthen the professional level of ordinary investors education,training rational investment in the concept of investment,while cultivating mature institutional investors,making it the backbone of the stability of the market. |
