Proceedings of the 2018 2nd International Conference on Management, Education and Social Science (ICMESS 2018)

Research on the Influence of International Commodity Market on China Stock Market-From the Perspective of Financing Liquidity

Authors
Sicong Li
Corresponding author
Sicong Li
Keywords
Commodity Market; Stock Market; Financing Liquidity; Market Linkage
Abstract
This paper studies the interaction mechanism between commodity market and China stock market from the perspective of financing liquidity. Since the financialization of commodities, the correlation between commodities and the stock market has experienced its first rise after experiencing the sharp fluctuations in the rise and fall. This paper constructs a series of liquidity indexes which can explain 17% correlation change between the stock market and commodity market. The empirical study reaches a conclusion that the degree of correlation between the two markets will increase significantly when funding liquidity deteriorates. This study shows that the change of the financing liquidity condition of overall financial markets is an important factor affecting the interactivity of commodity market and stock market. In addition to providing a new perspective for discussing the interactivity of commodity and stock market, this paper also has important reference value for the practice of asset allocation.
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