Do Lottery Market Affects The Stock Market

The stock market in China is characterized by high turnover,high price-to-earnings ratio and high volatility.It is referred to as "casino" by some scholars and invesment experts.The investors' preference for betting has an important influence in the stock market.However,people's gambling psychology is easy to perceive but difficult to observe.Unlike other psychological features,betting preferences are widely present in various behaviors,such as the equally prosperous lottery market.There are many similarities between lottery market and stock market,and there may be a certain link between them.Based on this,this thesis attempts to study the influence of the lottery market on the stock market under the preference of gaming from the perspective of the external market.Using the data of "Dual-colored Ball" and Chinese A-share market and basing on the theory of decision-making,gambling cognitive theory and limited attention theory,this thesis studies the impact of the lottery market on the stock market and the differential impact for the characteristics of different stocks,the results are shown as follows.Firstly,the lottery market has a significant impact on the stock market,and the increase in attractiveness of the lottery market will reduce the trading activity and return of stock market.Secondly,Lottery-type investors prefer trading stocks with low past returns and lottery stocks,such stocks are more affected by the lottery market.Thirdly Institutional investors and individual investors have greater differences in trading preferences,the former showing more rational characteristics,and may have a certain role in promoting the effectiveness of the stock market.From the perspective of the external market,this study examines the links between different markets with similar behavior,broadens the research perspective,and enrichs the study of capital market betting behavior.At the same time,this thesis frinds certain rules of the capital market,contributing certain reference value to investors' investment decision and policy organization's policy formulation.