The Relationship Between Hot Money and Capital Price Analysis

The background of international market for appreciation of RMB has continued to strengthen since 2002 and the Chinese exchange reform has raised more interests and confidence in speculation for RMB. Besides, almost in the same time, the domestic assets price including real estate and stock price climbed to their historic summit, rendering more and more international capital to rush to inflow into China. According to this situation, we will try to analyze the existence of hot money by researching Chinese balance of payments, to build a new method to estimate the scale of hot money in China by dissecting the inflow paths, and to verify the relationship between the hot money and stock price by building the econometric models. In consequence, the result showed that the impact of changes in the international hot money for the stock index did not have statistical significance.The background of international market for appreciation of RMB has continued to strengthen since 2002 and the Chinese exchange reform has raised more interests and confidence in speculation for RMB. Besides, almost in the same time, the domestic assets price including real estate and stock price climbed to their historic summit, rendering more and more international capital to rush to inflow into China. According to this situation, we will try to analyze the existence of hot money by researching Chinese balance of payments, to build a new method to estimate the scale of hot money in China by dissecting the inflow paths, and to verify the relationship between the hot money and stock price by building the econometric models. In consequence, the result showed that the impact of changes in the international hot money for the stock index did not have statistical significance.

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