Commodity Financialization And Asset Price Fluctuation

In recent years,with the global economy picking up,the capital surface has become loose,and the commodity market has become increasingly sought after by investors.The change in the price of ordinary commodities gradually deviated from the relationship between supply and demand,showing a trend of financialization.From the macroeconomic perspective,excessive financialization will breed the risk of asset price bubbles and distort the normal prices of commodities,which will have a negative impact on the real economy.Therefore,studying the financialization of the commodity market and its interaction with asset price fluctuations is of great significance to all parties involved in market transactions,whether investors,hedgers or policy makers.The purpose of this study is to combine theoretical analysis and empirical analysis to understand systematically the development history of commodity financialization in China and the different levels at present stage,and to explore the relationship between commodity prices and financial market prices in different levels of financialization.The mutual influence relationship provides certain considerations for regulating the order of commodity markets and reasonably controlling the phenomenon of financialization.In terms of theoretical analysis,this article first defines the concept of commodity financialization,and sorts out the development of commodity financialization from the perspective of economic development and financial deepening.It also separates three types of commodities,namely general commodities,bulk commodities,and capital goods.The reason for the financialization of commodities was also discussed.Second,from the perspective of asset price fluctuations,the asset prices of different markets that need to be studied in this paper are clarified,and the characteristics of price fluctuations of financial assets are summarized,which provides a reference for dividing the level of commodity financialization.Based on the three theoretical perspectives of economic foundation,market contagion and behavior theory,this paper attempts to explain the theoretical mechanism of the mutual influence of different asset price fluctuations in the context of commodity financialization.In terms of empirical analysis,this paper divides the selected representative 15 different commodities into three levels of financialization: low,medium,and high by means of factor analysis.The price changes of these three different levels of financialization products and the stock on behalf of the financial market have jointly constructed a VAR model to explore the interrelationships between changes in commodity prices and stock prices and the impact of price changes between commodities at different levels of financialization.The empirical results show that:(1)The price fluctuations of stocks and commodities at different levels of financialization have different effects on each other.The mutual influence between the medium-financial-level commodities(i.e.,bulk commodities)and the growth rate of the stock price index is deeper,and the impact is more persistent,indicating that the volatility between the two markets is more relevant.The price fluctuations in the stock market have a relatively limited impact on the price fluctuations in the low-financial-level commodities(i.e.,ordinary agricultural products)and high-financial-level commodities(i.e.,real estate).(2)From the inside of the commodity market,the degree of mutual influence of commodity price fluctuations at different levels of financialization is asymmetric,but there is a mechanism for mutual transmission.(3)The mutual influence between price fluctuations among commodity markets is stronger than the price fluctuations between the commodity and financial markets.It can be seen that the prices in the commodity market are still mainly determined by the fundamentals and supply and demand,which is significantly different from the pricing mechanism of financial market.Finally,the corresponding policy recommendations are proposed for reference.