China Stock Market Essay

In the 1980s, China began the process of opening its billion people market to the world, the once closed door began to open and the flood of investment began. The country labeled as the sleeping giant began to awoken and see drastic changes in its economic climate, over the past 30 years the GDP per capita of raised from roughly $130.00 to near $7,000.00 levels. With the massive boom and the constant inflow of investments comes a hurdle that could heavily affect the economic future of the country, a bubble is forming.

As the 21st century rolled in the quite economy was all the rage in the world, companies from all over the world know that “If you are not in China, you are not big enough.” But as will all good things, it all most come to an …show more content…
The risk of China and the US stock market is different with the Standard & Poor 's index for the past 10 years has a volatility of about 1.25% a day; with fuses at 7% which is about five and a half times the standard deviation. This is not a normal distribution; the probability of occurrence in reality is much higher, about once every two years, which historically was 7 times over the past 14 years. In Comparison the daily volatility of China 's Shanghai and Shenzhen index of about 1.8%; A shares of the daily volatility of up to 2.75%, 7% which is equivalent to only two and a half times the standard deviation, in theory, however the probability of occurrence of a higher average of 40 trading days will occur once (in the past 2 years occurred 14 …show more content…
Using a stochastic simulation of a randomized process of geometric Brownian motion (GBM), divided into 1000 random lines over a four years period. The simulated results justified a 15% 7% of the S & P index fused to match. With China, you can set A shares of a fuse cut down to 12%, to avoid