'The Threshold of One-Year: The Speculation or the Investment?' - the Superficial View of the Behavior of the Chinese Investors at the Financial Market and the Rationalization of Investment

Posted: 6 Sep 2001

Abstract

On account of that China is more close to retake its seat in the WTO, it is necessary that the adaptation to the international justified rules of the Chinese financial market of the securities and stocks could be on the effect and at the same time, the international challenge will be on the way in to be met with.

The critical problem at the present is about the level of maturity of the Chinese investors at the financial market, especially at the stock market - this is of the most important signal of the maturity or not, concerning the financial market of a country - that is preoccupied.

On one hand, the institutional investors, who are of the principal subject of investment at the West financial market, occupy a minimum of proportion in China about the operational scope and they can't function correctly to develop and stabilize the Chinese financial market; on the other hand, the scope of the individual investors (diversified accountants) is more large at the Chinese financial market (e.g. the Two Stock exchanges of Shanghai and Shenzhen...) and they turn into as the dominant subject of investment. Because of the different qualities and being too far away from the maturity about the behavior of investment, the individual investors always run after the short-term benefice and it makes the financial market be full of volatilities to the extent.

"The characteristics of the diversified market are of one important reason to explain the amplitude of volatility of the Chinese financial market." In this way, it is obliged to know of that how to guide the Chinese individual investors to make their rational decisions on investment but the speculation.

In my works here, we will together discuss some probabilities: if the behavior of the Chinese stock holders on the investment is mature and if theirs investments are rational and comprehensive by the contrast between the Chinese financial market as one emerging one and the developed ones on some fields. The motivation of the presentation of these possibilities is to understand more clearly the popular strategy for the moment at the Chinese financial market and its consequences: the threshold of one-year is only specific at the Chinese stock market about the stock exchange.

Keywords: threshold of one-year, speculation, long-term investment, behavior, ST/PT, diversification

Suggested Citation

Wang, Damu, 'The Threshold of One-Year: The Speculation or the Investment?' - the Superficial View of the Behavior of the Chinese Investors at the Financial Market and the Rationalization of Investment. Available at SSRN: https://ssrn.com/abstract=278838

Damu Wang (Contact Author)

Independent ( email )

8 Rue Vincent Compoint

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