Stock Price Index In China Case Study

The paper will begin with a Review of the Research. This section will summarize all the information gathered for this paper. Here the background will be given and the foundation laid for the rest of the report. Next will be the Application of the Research. This is

In this paper, I will be discussing my tentative topic that will include my dissertation research problem statement along with the purpose statement of my dissertation. I will also include the method of research, which will state the quantitative and qualitative methods. I will list who are the potential study participants and the research question. This paper will also entail the theories and element that support them. I will weigh the viability of the dissertation study and explain my degree and specialization.

In the last three months of 2008, under the general decline in the global stock market, numerous Asian stock markets were in free fall. The key stock index such as Nikkei 225 in Japan, Hangseng in Hongkong and Sensex in India suffered significant drops. (Rose & Spiegel, 2009)

The second and chief objective is to assess the impact of the crisis on the foreign exchange and stock markets. The report answers why the crisis adversely affected the Latin American market indices while the US market indices continued to rise.

of economy. However, the existing literature is silent on the stock price dynamics and agency costs

China was one of the fastest growing economies after 2000. China’s GDP grew at an average of 10% from more than last decade with fast paced manufacturing and industrialization. Shanghai stock exchange, biggest stock market in Chinese economy, kept on growing at fast pace, which recovered quickly through global meltdown of 2007 and after 2014, it grew enormously, due to which it almost doubled its value within a year. Increasing trend of Margin trading and overpriced stock prices gave rise to a volatile bubble which finally burst in June 2015, which led this country to face the biggest stock market crash of their history. We will try to analyze whole event, all the factors which contributed to this Government supported fiasco and its impact on future of Chinese economy as well as on the rest of the global economy.

The stock market is one of the leading influences on price setting and trade markets. It can have both positive and negative effects on prices and movement in trade both domestically and internationally. The United States stock market has had a long history of influence not only on our economy, but also on a global scale. Currently, the stock market has been slight downturn, due to falling oil prices and agricultural commodities. Which allows for cheaper products for the consumers. It is clear to see that the stock market has and will continue to influence how the average person goes about their day to day life.

In China, the average economic growth rate from 1998-2013 was 9.6% (IMF, 2013). The major contributor of economic growth was capital especially the non-ICT capital and TFP. However, in the recent years TFP growth is declining and almost reached zero in 2013 but non-ICT capital is constantly growing with 6.0% growth in 2013 (CBTED, 2014). The trend on non-ICT capital and TFP from 1998 to 2013 is depicted below.

This introductory chapter will briefly present the orientation, assumptions and methodologies of the dissertation to foreground the subsequent chapters. We start this chapter by introducing rationale and background of the research in Section 1.1 and

Zhavo (1999): Attempted to find out the relationship among inflation output (industrial production) and stock prices in the Chinese economy. The study employed monthly values covering the period from January 1993 to March 1998 the results indicated a signification and negative relation between stock prices and inflation. The finding also indicated that output growth negatively and signification affects stock prices.

More or less a third of the entire world’s stock market capitalization is represented by the five BRICS countries. The expected average growth rate for these emerging markets is expected to be four percent higher than all developed countries. Average growth rate for emerging markets is expected to be at five percent according to IMF predictions. Although for some of the BRICS countries overall growth may be lower than in previous years, yet these economies will still be probable to grow at a faster rate than developed countries. Long-term growth for these emerging markets looks very promising given these good growth projections, generally better debt-to-GDP ratios and higher foreign reserves compared to many developed countries. Rising

In 2015, Chinese stock market climbed to an unprecedented high point. However, the real economy cannot catch on the inflated stock market. The creation of a bull market by increasing leverages finally burst the bubble. The Chinese government initiates extraordinary measures such as buying stocks, freezing IPO, prohibiting big shareholder to sale, and injecting stimulus. Overall, the government has spent 236 billion dollars, but the policy is not effective.

Websites and Books have been used for the research of this paper. Information obtained and quoted from books are accurate; whereas the material used from websites are not always correct but the information taken from web sources are written in the paper by further research on every point.

Using a Capital Asset Pricing Model (CAPM), this research showed that stock price indices in the two countries indeed have a long-term and stable relationship with a clear causality going from the U.S. to Vietnam. Surprisingly, after augmenting the traditional theory with the exchange-rate volatility and applying a newly developed time-series econometric technique, Vietnamese stock market has been proved to be also affected by the foreign exchange market. This is a new transmission mechanism through which financial markets between the two countries are connected. The finding also hopes to redefine the famous Efficient Market Hypothesis (EMH), a cornerstone in finance.

A study on the factors that influenced Malaysian stock market index is carry out in order to measure the movement of Malaysian stock market with the concern of macroeconomic variables which include the money supply (M2), exchange rate (EXR), inflation rate (CPI) and also industrial production index (IPI).