| Subprime Crisis which broke out since April 2007 in the U.S. and which has been lasting for more than 18 months, has not yet stopped. Moreover, the prospects of this financial event remain unclear. Recently, the U.S. Government has take n over the "Two Rooms" (FannieMae and FreddieMac) and American International Group, all the Top Five Wall Street Investment Banks have experienced great changes, Washington Mutual Bank has gone into bankruptcy and Wachovia has been trapped into deep financial crisis. All these financial events have shown and certificated that Subprime Crisis which is also Credit Crisis and Liquidity Crisis, originated in the U.S. Mortgage Market, related to Subprime Mortgage Securities, has been thoroughly evolved into a global financial crisis, extending from the U.S. Capital Market itself. International Monetary and Financial Organization (IMF) believed that this financial crisis has become the most serious financial crisis in the world since the 1930s Capital World Crisis. The World's Economy has been apparently slowed down, major Stock Markets have been greatly shocked, the International Foreign Exchange Market has experienced widely vibration and most Investors have been lack of confidence to invest. Highly dependent on the external world, more and more connection to the international finance and economy, China and its economy has been naturally affected by this Subprime Crisis. Under the circumstance of financial crisis, the deterioration of the International economic environment has played a significantly negative role in China's economy and brought a downward pressure to China's Financial Market. The Statistics Data has shown that in the first three quarters of 2008, China's average GDP growth rate is 9.9 percent, up to 2.3 percent decline of same period in last year. With regard to the financial crisis, there will be many issues which are worthy deeply researching and analyzing. However, in the view of this Subprime Crisis has not yet been over and the prospects have not yet been clearly determined, the recent analysis and speculation about the ultimate impacts and results of this event will be lack of accuracy and probably have some improper bias. Besides, the World's Financial Markets itself has been full of complexity and unpredictability, the financial events are always triggered accidentally and the transmission of financial events has time lag or delay. Thus, the focus of this dissertation will not stay at the ultimate impacts and results of Subprime Crisis in the United States or a particular economy, will not focus on the U.S. market or Global Financial Market, but will select a specific entry point, focusing on the effects caused by Subprime Crisis, based on China's Capital Market, mainly exploring and analyzing the transmission of Subprime Crisis to China's Capital Market, especially Stock Market. Taking into account that China's Finance Market and Real Economy have been relatively independent to the global finance and economy, as well as the indirect transmission of Subprime Crisis in China, this dissertation will start from the origin of the crisis and its effects, discuss and analyze the variety of transmission channels and means of Subprime Crisis, and induced the five mainly important transmission mechanisms, which can be called the exchange rate mechanism, the capital flowing mechanism, the interest rate mechanism, the asset price mechanism, the expectation mechanism. Besides, influenced by all these five mechanisms, China's Entity Economic and Financial Market will gradually and indirectly be affected in all aspects, and a tremendous downward pressure will be brought into China's Capital Market, especially Stock Market. Finally, based on the analysis above, this dissertation will make a summary of the transmission mechanism, and will suggest the related official bureaus to build an early warning system of Stock Market. |
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