Policy Report : Chinese Stock Market

In order to study how stock prices react to these events, approximate three years of continuous daily stock price are chose, beginning at 17th March 2008 and ending more than three months after the final event at 22nd April 2011. In addition, SHANGHAI Stock Exchange Index (SSE) is adopted as a proxy of the market portfolio.

The psychological perspectives of investors towards regulations have caused many of them to withdraw, due to fear

Such scandals cost businessmen great sums of million dollars when affected companies collapsed in their share prices thus the confidence of the public in the country’s security markets was affected adversely. In July 2002, when the bill was being passed, there was intense pressure on the Congress to restore people’s belief in the capital markets before elections to the Congress (Act, S, 2002). Some of the new and impressive regulations in the act are as discussed in the proceeding paragraphs.

While 2008 neared its close, financial institutions capsized worldwide. Earlier that year the main American stock index, The Dow Jones, began a downward spiral that ended up peaking the following March; a historic market low comparable to its 1997 levels and despite a sizeable recession, the dot com bust, occurring in between the two troughs (1). More broadly, the International Monetary Fund recorded a 1.7% decrease in global GDP during the approximately two-year period (2). This global contraction of economic growth became known as the Great Recession, the worst financial crisis since the one that indirectly sent the entire world into yet another bloody war. Just like the Dow, the responsibility for this international calamity lurks behind American markets. This collapse is inextricably correlated with the burst of the American housing bubble and multiple subsequent bankruptcies that required Federal Reserve intervention to solve. Nonetheless, our government, through imposing limitations on shadow banking or not deregulating the banking sector in the first place, possessed the capability to prevent this financial disaster throughout its development.

For example, the 1929 stock market crash has been frequently rising high amounts, and the bull market has been showing no indications of reducing. One of the commonly effects of the stock market crash was prot-making that has been deleted as merchandise benefit, “ during crashes, the Dow Jones industrial average has set its most dismal records and investors have lost trillions of dollars ”(Terzo). Both the stock market crash of 1929 and 2008 took economist white-collars and statesmen by shock. The United States policy makers accuse the deficiency transparency in economy securities and deal-making policies, “ The Securities Act of 1933 required that companies provide transparency about their financial health to investors when selling equity shares”

In 1 December 2001 with Financial Services and Markets Act 2000’s (FSMA) entry into force, market abuse regime presented for the first time to secure the justice against the trade which based on inside information. Likewise the criminal regulation about insider dealings despite that market abuse regulation compasses more transactions. Additionally even though market abuse can cause high amount fines, can not set up to detention.

In 1929, a great tragedy occurred in the United States: The Stock Market Crash of 1929. During the time, the US was recuperating from World War I, and the majority desired to return to a state of “normalcy,” which included trading with other countries, but remaining neutral in foreign affairs. The government was under implementation of a laissez faire tactic, which limited government intervention in the economy. The advocacy of less government interference, in part, resulted in the stock market crash. The crash was a result of people who were uneducated in stocks, randomly placing their money in stocks. These stock companies decided to raise their prices, therefore people could not longer afford to buy shares, meaning the companies lost their

In the beginning of the financial crisis, most people normally will not realize or predict the disaster that is coming. As John Kenneth Galbraith discussed in “The Great Crash 1929,” “only after the market crash were there plausible grounds to suppose that things might now for a long while get a lot worse” (pg. 90). During the Wall Street Crash of 1929, the most destructive stock market crash happened in the United States’ history. There are numerous causes dedicated to this crash, such as, the inequality and the poor regulations of structures. The causes of this 1929 Great Crash are similar to those of the Financial Crisis in 2008. However, the Wall Street Crash of 1929 led to “a longest and deepest economic downturn in the United States’

The relaxation on financial regulation, it is always a problem or challenge for authority to confront. Because at initial time ,when reducing the financial regulation ,it usually can

There will be fluctuations and declines in the stock market. Many of the decision makers will decrease the number of company contracts, buyouts, takeovers or mergers. Changes will come in the form of the government making stricter regulations in the legislator while making structural changes. When this behavior happens investors will start to take the less risky investment routes. The more favorable investments include

This paper will encompass the importance of the U.S stock market/stock exchange versus the Chinese stock market/ stock exchange, with a brief introduction about how each stock market/stock exchange came into existence, the importance of each stock market/stock exchange, how the U.S and Chinese manage their stock markets/stock exchange, how corporations are appointed plus the rules and regulations. This will also entail random facts about each stock market/stock exchange. Stock markets are like hitting a royal flush, if the price of your stocks goes up, you win; if it drops, you lose! The stock market, also known as the fairness market, is one in which shares are owned by companies and their shareholders. The companies that are on the stock market, its stocks are issued and traded publicly, through either exchanges or over-the-counter markets. The stock market is considered to be one of the most critical components of a gratuitous-market economy that provides companies with access to dominance in exchange for giving investor’s the opportunity to have some type of possession of the company. The stock market gives those the power to invest monies, and to capitalize on their gains. This in return can bring about wealth to some without having to take a financial risk in starting up a new business.

The second week of October in 2008 was the worst week for stock market during 75 years, Buckley (2011) state that the worst record was the Dow Jones Industrial Averages dropped 22.1%, but it fell 44.3% then. In general, a financial crisis is not an accident; it may take several years and has complex and interlaced causes (Claessens and Kodres, 2014). The 2007-08 global financial crisis is a typical case due to long-term non-intervention policy and loose regulation for financial market from government. Moreover, it involved the complex relationship between government and financial institutions. In order to look at this issue in particular, this essay first goes though the timeline of the 2007-08 financial crisis, particularly in U.S. and

In today’s world, economic power is the prime moving force in determining how much a country can produce, buy, or sell their products or services. One notable economic powerhouse is China. Over the years, the Chinese business climate has grown from a centrally planned economy to a socialist market economic system. Having this new economic system gives foreign investors many market opportunities. However, one must not forget the differences in political and cultural environment that can create risk and uncertainty for foreign investors. According to a 2010 survey by the US-China Business council, companies are reporting strong growth and profitability despite the economic downturn. China has a large market and their purchasing power is ranked second in the world. Although companies are profiting, there are fourteen business issues in China. They are: administrative licensing barriers, competition with PRC state-owned enterprises or national champions, intellectual property rights enforcement, cost increases for labor and raw materials, restrictions on foreign investments, restrictions on market access in services companies, transparency, government procurement standards and conformity assessment, protectionism risks in China, lack of equal treatment from domestic companies, lack of consumer awareness/understanding about products, miscommunications due to language barriers and ethical issues, and the difference in human resource practices. In the United States, managers tend

As explained above the Wall street crash has had major impacts of the US and world economy. It has been the subject of academic debate economically, historically, and politically from when it happened to present day. It is important to study the wall street crash as it will increase our understanding of the risks of the stock market

market and the concept of 'market failure '. This essay is analysing some of these