Research On The Influence Of Margin Selling On Stock Price Fluctuation

Before March 31,2010,China’s stock market has been in a state of "unilateral trading".While the traditional financial market restricts short selling and short buying,it also limits the full expression of investor sentiment in the market,resulting in that the stock price generated by the traditional stock market pricing mechanism can not fully converge to the intrinsic value of the stock.In addition,speculators who widely exist in the market can only buy and sell stocks one-way and keep speculating on the stock price to obtain the spread return,which further aggravates the deviation of the stock price from the intrinsic value of the stock.The long-term accumulation of the deviation between stock price and stock intrinsic value in China’s stock market will aggravate the occurrence of risk events and affect the long-term stability of the whole capital market.Therefore,in March 2010,China officially relaxed the restrictions on short selling and started the pilot operation of margin trading,and the Chinese stock market also formally bid farewell to the state of "unilateral trading".Since the implementation of margin trading for 12 years,it has experienced six largescale expansion and many small-scale adjustments,and the stock pool of margin trading has expanded from 90 underlying stocks in the pilot operation to about 2400 at present.With the continuous expansion of the stock of financing and securities financing,the influence of the stock credit trading mechanism on the traditional stock market is also increasing.During this period,many scholars focus on the market anomaly of margin trading in China’s stock market,constantly using different research methods to explore the impact of margin trading on China’s stock price volatility,and strive to explore ways to improve the pricing mechanism of China’s stock market by optimizing the margin trading mechanism.However,in the past,most of the literature focused on margin trading on the whole stock market or a certain sector of the stock market,and there are few specific studies refined to the industry level.And there are differences in the previous literature on the role of margin trading on stock price volatility,so that the existing literature plays a limited role in guiding and drawing lessons from promoting the development of specific industries.On the basis of previous studies,this paper takes the science and technology industry and the public utility industry,which play an important role in China’s national economy,people’s livelihood and long-term development,as the research object.through the methods of qualitative analysis,quantitative analysis and comparative analysis,this paper explores whether margin trading has played a role in stabilizing stock price fluctuations,improving market activity and reducing the overall risk of the market as scheduled.Based on the above analysis conclusions,this paper gives relevant suggestions for individual investors,exchanges,securities firms,listed companies and regulatory authorities,in order to contribute to the rapid development of margin trading in China’s stock market.The study found that margin trading has a significant stabilizing effect on stock price volatility,whether based on the public utility industry or the technology industry.This is because margin trading provides investors with a way of two-way trading,noise trading will be relatively reduced or neutralized within noise trading,and the leverage of margin trading is not enough to disturb the market.On the contrary,margin financing can also promote the heterogeneity belief of investors to be better reflected in the stock price,and the stock price is easier to achieve mean regression,thus relatively stable.