The Research On Risk Contagion Effect Of International Stock Market

The world of economic globalization and financial integration process has been strengthened.Just under such a background,the national financial market becomes more integrated into the global one.China is opening up deeper and wider to the outside world since the 5th National Financial Work Conference in July,2017.At the same time,with the great step of the finance innovation,the trend of the acceleration of trans-market financial risks across sectors and geographic regions is clear.President Xi Jinping stated that “Finance is the core of the nation's competitiveness,and thus financial security is a critical component of national security.” Modern China is confronted with multiple hazards and is undergoing what economists call a “structural transformation”,which may make the research regarding financial contagion hold a theoretical and practical significance.Therefore,this paper has been based on literature review about risk contagion and the financial and economic situation of our nation,targeted at stock index's return rate in eight countries and regions such as China,Britain,the United States,France and Japan since 1990,using GARCH-Co Va R models to simulate the volatility of stock market and then verify the risk of contagion effects 's significance especially the risk of transmitting into our country which comes from 7 famous foreign securities markets.The study showed that the GARCH-Co Va R model can effectively measure the risk contagion effect and systematic risk.Based on the research findings,the study made some recommendations and suggestions for our financial authorities: Considering the inner condition of our econmy and finance,advance the opening-up of capital markets in an orderly fashion;Following the latest developments on the international financial markets,build macro-prudential financial regulatory and supervisory framework;Steping up cooperation on international financial oversight,enhance early warning and supervisory ability regarding the cross-border transmission of financial risks;Managing the futures market and spot market as a whole,use Share Price Index Futures to mitigate risks.