Crouching Tiger Hidden Success? : A Futurology of the Chinese Stock Market

University essay from Institutionen för ekonomi och företagande

Abstract: This Master’s Degree is a futurology that aims to analyse how the Chinese stock market might develop for a period of ten years, i.e. between the years 2005-2015. Since the future never with certainty can be predicted, scenarios will be presented displaying other possible outcomes. Naturally these scenarios are built upon given assumptions which otherwise could be as many as one’s imagination allows. The thought is to present the results as an index so the reader easily can see the possible development and scenarios. The methodology used to collect necessary data is through the classical Delphi method, by which one interviews the selected “experts” that have the knowledge needed of the Chinese stock market. Moreover, the authors have collected further information through literature, the Internet, articles, reports and other written sources needed to continue further investigation. Further, the forecast was measured by two steps. The first step was to calculate the value at the start point. The second step was to create tow types of scenarios, added as a frame of the forecast outcomes. To transform the analysis and the scenarios in to a numerical index, a technical measurement of Quasi Monte Carlo Simulation was applied. The theories applied when creating the index is foremost the Arbitrage Pricing Theory, which makes it possibly to measure several factors at the same time, including macro economical effects on the stock market. According to the result, four factors were identified as the driving forces when finding a balanced economy, which affect the stock exchange: the investment structure; equal standard of living; the state of the financial sector and increased transparency. The result also indicates that the Chinese stock market will not stay in parity with the earlier development. A healthier and more efficient market will occur, due to structural reforms and the expected improvements within the financial sector including the stock exchange. It is with great anticipation that the authors await a bright and successful future for the Chinese stock market. A new direction has been settled, although there are many difficult challenges.

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