Second, the credit system favors larger firms. Even if China continues to reform the legal system to protect the stock market, the rapid stock market development makes those reforms ineffective. The Chinese stock market external environment problems are mainly arising from the following three causes:įirst, the legal system development lags the market. The Chinese stock market provides strong investment opportunities, but the lack of exchange management leads to the low efficiency of external environment governance, making it difficult to ensure the sustained and healthy development of the stock market. What’s more, the financial environment in China is different from that in the United States. For example, the regulation of the Chinese stock market is neither efficient nor effective. The main problem is that the Chinese stock market founded only a few decades ago, which means that it is still immature. In order to investigate the similarities and differences between the Chinese and the United States stock markets, this paper mainly presents a series of qualitative evaluations and quantitative calculations.Īccording to the analysis of Lin & Song (2001), the Chinese stock market has more limitations than the US stock market. There are many alternative methods which are available for solving these problems. However, as far as I know, the exploration of the relationship between different stock markets has rarely been done. The foremost problem is the fact that some people get a great fortune from the stock market, while others lose everything additionally, the stock market is increasingly globalized. Nowadays, stock trading has become an explosive topic among people. This factor connects all stock markets to some degree. The higher market price caused the new gold rush globally, which causes the stock price of rare material companies to increase. In 2018, as a result of the increase of the stock price of material companies, the market price of gold also increased. The stock market also affects the price of commodities. At the beginning of 2016, as the consequence of the crash of the Chinese stock market, the global financial melt down almost caused a new financial crisis. However, the stock market kept dropping with no trading in the shares. The exchange applied a trading halt to shares of 1400 companies, more than half of those traded. In 2015, the Chinese stock market suffered a great loss: the Shanghai Stock Exchange lost a great portion of its value. Furthermore, since the trading price of the stock market can objectively reflect the supply and demand of the stock market, reference for the issuance of the stocks in terms of price and quantity can also be provided. Through the issuance of stocks, a large amount of capital flows into the stock market and thence into the issuing enterprises, which promote the concentration of capital, improves the composition of enterprise capital, and greatly accelerates the development of commodity economy. In the past several decades, stock markets have played an important role in the economy. As a result, research on stock markets has a long tradition. Every developed country in the world constructs its distinct system of stock trading to support its economy, and Stock data inform us about trading returns and risks, providing clues about the differences between the economies.
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