Thursday, 28 January 2016
In 2015, China's A-share market experienced violent abnormal volatility. The Shanghai stock exchange index lost about 40% from its peak record in May. Injections of government bailout funds failed to calm the market. Investors suffered great losses and the individual investor dominated trading sphere was overwhelmed by fear, doubt, anxiety, and despair.
What were the causes of this unpleasant stock market adjustment? Over-confident market expectation? Misuse of leverage? Flaws in the trading system? Or the lack of sophistication of the investors themselves? Professor Li will review the finance literature and present a series of quantitative analyses to provide his insights.
His analyses illustrates the importance of policy guidance on investors to reduce speculative behaviour and nurture them to make informed value investment. The government can proactively guide investments through industrial policies. It is also important to deploy appropriate taxation policies to encourage long holding period and reduce market volatility.