The Influence Of Trade Balance Fluctuation On Stock Market

Since China's reform and opening up,China's economic opening degree has been improving,and China's foreign trade has developed rapidly.After China's accession to the WTO,the trade scale of China increased rapidly.China's trade surplus increased from us $22.545 billion in 2001 to us $298.131 billion in 2008.In 2013,China became the country with the largest global trade in goods.In recent years,due to the slow recovery of the global economy and trade friction,China's trade surplus fell to 351.763 billion us dollars in 2018.The huge foreign trade of our country has a wide impact on the economy.China's foreign trade can directly promote China's economic development.At the same time,the increase of China's trade surplus caused a sharp increase in China's foreign exchange funds outstanding,which once became one of the important channels of China's money supply,and the excessive money supply pushed up the asset price of China to some extent.In addition,the long-term trade surplus of the RMB exchange rate has accumulated greater appreciation pressure.In the context of China's economic development entering the "new normal",China's international balance of payments pattern will also change.With the emergence of China's recessionary trade surplus pattern,China's trade balance may have two-way fluctuations in the long term,which will have a more complex impact on China's economy and stock market.Therefore,it is of great significance to study the influence of China's trade balance changes on China's stock market and its transmission channels.First of all,based on the background of China's reality,this paper reviews the existing research theories and theoretically analyzes the direct impact of China's trade balance on China's stock market and the indirect impact of China's trade balance on China's stock market through the channels of money supply and exchange rate.Secondly,in the empirical aspect,this paper USES ms-var model to conduct an empirical analysis on the monthly data of China's trade balance,broad money supply,real effective exchange rate of RMB and Shanghai composite index from 2005 to 2018.The empirical results show that China's trade balance has a direct effect on China's stock market in each fluctuation zone system.Secondly,in the money supply channels,the increase of broad money supply has a positive impact on the stock market,among which the monetary supply within the zone 3 system has the largest impact on the stock market.In the exchange rate transmission channel,within zone 1,the appreciation of the real effective exchange rate of RMB will lead to the decline of the stock market,while within zone 2 and zone 3,the appreciation of the real effective exchange rate of RMB will have a positive impact on the stock market in the short term,but will lead to the decline of the stock market in the long term.It indicates that in the system of high fluctuation zone,the appreciation of RMB has a positive effect on China's stock market through psychological factors or attracting short-term international capital into China in the short term,but in the long term,it still has a restraining effect on the stock market by affecting China's trade balance,satisfying the flow-oriented theory.Finally,the volatility of China's stock market has a great impact on the stock market,indicating that there is still herd effect in China's stock market.Finally,according to the conclusion,some Suggestions are put forward:China should accelerate the realization of trade industry upgrading and trade structure optimization;China should accelerate the establishment of the long-term mechanism of money supply under the new normal;China should promote market-oriented exchange rate reform and improve the development of China's stock market itself.