The Empirical Research On Influence Factors Of China's 'The Belt And Road Initiative' Infrastructure Industries Stock Indexes

In the fall of 2013,President Xi Jinping put forward ‘the Belt and Road Initiative',and in the following years,a series important cooperation outcomes has been achieved among China and the countries and regions along the route.The highlight of the initiative is to promote the regional and global cooperation on infrastructures and production capacity,and further,to enhance China's‘Going out' Strategy in the capital and technology industries in which China has a big strength on one hand,and attracting more foreign capitals on the other hand.With the implementation of this initiative,a number of listed Chinese companies have made a rapid growth,which attract more investors' attention.In consideration of the characteristics of implementing ‘the Belt and Road Initiative',this article sets China's non-financial outward direct investments,overseas projects contracting and the actual use of foreign investments as three influence factors,and use the monthly stock return data to establish a series of vector auto-regression models(VAR)between the three factors and five Chinese industries stock indexes that have close link to infrastructures and production capacity,namely steel index,construction machinery index,construction index,building material index and heavy machinery index.After that,the author makes an weighted index named ‘the Belt and Road Initiative' infrastructures index by combining the five indexes,and use the VAR method to synthetically test the influence of the three factors to infrastructures industries of China stock market.According to the Dividend Discount Model(DDM),the Theory of Efficient Capital Market and the M-M Theory under the Condition of Income Tax,under the following three hypothesis: new projects have positive net present values,company's financing can make it reach or get closer to the optimal capital structure than before,and information can be fast disseminated within the stock market,the above mentioned three factors should theoretically improve a company's value,and then get its stock price higher.This article's research show that China's overseas projects contracting has a positive influence to all five selected industries stock indexes,non-financial outward direct investments also has a clear positive influence to those indexes except construction machinery index,the actual use of foreign investments has the least influence to those indexes,only heavy machinery index can be effected clearly.The empirical result of the influence of non-financial outward direct investments and overseas projects contracting accord with the relevant theories.The explanation of the weak influence of the actual use of foreign investments could resort to the Chinese industry's policy and China's overcapacity on heavy industry make foreign capitals hard to flow into China's infrastructures companies.Besides,the influence of overseas projects contracting,non-financial outward direct investments and the actual use of foreign investments declines gradually,the reason of this phenomenon should be the gradual improvement of the cash flow risk caused by the three factors,which reduces the companies stock price.If look from the angel of capital market efficiency,the empirical result proves that the China's stock market hasn't reach the semistrong-form efficiency level at present.