A Study On Investment Activities Of Chinese Institutional Investors

With the rapid development of macroeconomy, China is on the way to gradually institutionalize its investment. Investment intuitions have been achieving significant leaps, whatever on the proportion of holding the tradable shareholders, or on the manageable assets. Chinese institutional investors, however, always excessively focus on short term benefit, and neglect the risk, which results in significant danger for the development of the stock market and wealth of the public client.This paper analyses five kinds of institutional investors, which are stock investment fund, insurance company, qualified foreign institutional investors, social security fund and stock dealers, respectively, from 2007 to 2008 based on normal analytical method. Moreover, we reveal that the institutional investors in China are commonly bounded rational which is a widely accepted concept in behavioral finance, especially the stock investment fund. These organizations always consciously manipulate the stocks'price, and speculate on the stock market when there are irrational behaviors on the market by the means of the individual investors'herding effects.On these problems, we suggest three methods in order to standardize the investment behavior of the institutional investors. Firstly, consummate the legal system, which suggests careful investments. Secondly, try to modernize the institutional investment teams. Thirdly, develop the external competing market of the developmental fund.