Research On The Dynamic Correlation Between China And India's Stock Market From The Perspective Of Chinese Investors

With the improvement and opening up of international financial markets,Chinese investors can invest various types of financial products on a global scale,Investors should not be confined to domestic investment,but look to the international market,diversifying risks and increasing returns.In 2013,General Secretary Xi Jinping proposed the “One Belt and One Road” initiative,providing new opportunities for development of China and other countries along the route,among which,India,like China,is a major economy among the BRICS countries and a leader in emerging countries,with great potential for development.Therefore,the Indian stock market is a good target for domestic investors.After the administration of Trump came to power,the United States began to implement the strategy of “anti-globalization”.Although the U.S.stock market continued to rise under the influence of tax reform,the article does not study the U.S.stock market because of political uncertainty.Therefore,this article chooses India's stock market as the research object.Firstly,it makes a comprehensive analysis of Indian economic history data.According to the trend and growth of GDP in past years and the ratio of stock market capitalization to GDP,it compares with Chinese historical data to judge whether India's overall economic development trend is Good;Secondly,according to the dynamic correlation between India Mumbai 500 Index and China's Shanghai Composite Index,determine the linkage between the Indian stock market and the Chinese stock market to determine whether it is conducive to China's domestic investors to diversify financial risks and increase revenue.This paper uses the methods of descriptive statistics,correlation coefficient,ADF stationarity test,Granger causality test,impulse response function and variance decomposition to analyze the closing price of Shanghai Composite Index and Mumbai 500 Index.The results show that there is no clear dynamic correlation between the Chinese and Indian stock markets.Based on the empirical analysis,this article gives the following suggestions:(1)For Chinese domestic investors,they can invest QDII funds to buy shares in the Indian stock market to allocate international assets and diversify investment risks.At the same time,we should always pay attention to the risks brought about by the changes in the linkage between the Chinese and Indian stock markets.And before investing in foreign assets,we should properly measure our risk appetite and rationally allocate assets so as to reduce the risk of the asset portfolio.(2)For the Chinese government,they need adopt a resolute attitude towards the risk monitoring of the stock market,on the one hand,to perform the regulatory functions of the relevant departments and,on the other,to promote institutional building in China's stock market.In order to strengthen supervision and improve the ability to prevent and mitigate financial risks and prevent systematic financial analysis.