Research On The Impact Of Short-term Cross-border Capital Flows On My Country's Stock Market Prices

In the context of economic globalization and financial liberalization,since the realization of the current account convertibility in 1996 to the current steadily advancing the convertibility of capital projects,the degree of financial openness in China has continued to deepen.Moreover,in recent years,the 13th Five-Year Plan,the 19th National Congress,the opening speech of General Secretary Xi Jinping and the important speech of the 40th Anniversary of the Reform and Opening-up have all set clear requirements for the future expansion of financial openness.Since the reform and opening up,especially after joining the World Trade Organization,China's stock market has been increasingly open to the outside world.Since 2002,the Qualified Foreign Investor System(QFII),the Qualified Domestic Investor System(QDII),and the Qualified Foreign Investor System(RQFII)have been launched.Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect have been launched one after another,and A-shares have been included.The world's major stock index.However,compared with developed economies,the development of China's stock market is still not mature.The relevant laws,regulations and system design need to be improved.The investor structure needs to be optimized.The types of derivatives need to be enriched.Investor education and protection need to be strengthened to combat external shocks.The ability is weak.After the outbreak of the financial crisis in 2008,major developed countries adopted quantitative easing policies to stimulate the economy,and international capital flows were abundant,and cross-border capital poured into emerging market economies.Due to the weak US economy and the outbreak of the European debt crisis,China has attracted a large amount of cross-border capital due to its high growth rate and strong currency appreciation expectations.Under the influence of the mandatory foreign exchange purchase and sale system,the inflow of cross-border capital has increased China's foreign exchange reserves and money supply,which led to the formation and rapid expansion of asset price bubbles.Moreover,there is a self-reinforcing circular mechanism between short-term cross-border capital flows and asset prices.As cross-border capital flows in and out on a large scale,China's stock market prices have skyrocketed.With the continuous advancement of financial openness,the deepening of interest rate and the market-oriented reform of the RMB exchange rate formation mechanism,the continuous expansion of capital project restrictions,the steady advancement of the RMB internationalization process,and the future of China's financial opening will enter a higher level and deeper areas.The flow of capital will be more free,and the scale of cross-border capital flows will be even greater.On the one hand,expanding financial openness is conducive to improving the competitiveness of China's financial institutions and improving the efficiency of the financial system.On the other hand,the speculative and destructive nature of short-term cross-border capital flows caused by financial openness is gradually emerging.The price has caused a big impact,and it has even become one of the important sources of systemic financial risks.Based on this,this paper believes that in-depth study of the impact of short-term cross-border capital flows on China's stock market prices is of great theoretical and practical significance for preventing financial risks and maintaining China's financial security and stability.This paper believes that short-term cross-border capital flows mainly affect stock market prices through indirect channels such as interest rates and exchange rates.Large-scale inflows of short-term cross-border capital will increase liquidity supply in the market and market interest rates will fall.On the one hand,the decline in interest rates will directly affect the opportunity cost of investors,on the other hand,it will also reduce the financing costs of enterprises,and enterprises will expand production scale.Overheating of the real economy will also stimulate the rise in stock market prices and increase financial risks.Conversely,rising interest rates will cause stock market prices to fall.Cross-border capital inflows may also cause an increase in foreign exchange reserves and real currency balances and affect the real exchange rate,thus affecting asset prices.This paper analyzes the impact of short-term cross-border capital flows on China's stock market prices through two empirical analyses.The first is the empirical relationship between short-term cross-border capital flows and the Shanghai Composite Index,and the other is the empirical relationship between short-term cross-border capital flows and major industry price indices.The empirical analysis found that under the 5%significance level,the change of short-term cross-border capital flows and the change of China's stock market price are Granger reasons;secondly,the stock market price and exchange rate,interest rate,inflation rate,economic growth There is a common random tendency between these variables with their own fluctuation laws,and there is a long-term stable equilibrium relationship;once again,short-term cross-border capital flows have different effects on the changes of different industry indices.In view of the above research results,this paper puts forward the following suggestions:First,strengthen short-term cross-border capital flow management;Second,promote the healthy development of the stock market;Third,steadily promote the financial open strategy to maintain the stable operation of the macro economy and financial markets;Fourth,strengthen the world Cooperation between governments in regulation.