| The stock market bubble is the upward deviation of price from intrinsic value. By analyzing the speculative bubble event in history, we find that they all have a huge negative impact on economy. All these historical lessons tell us that the instability of the stock market will affect the real economy. Therefore, the research into the cause, measurement method and evolution of the stock market bubble is quite meaningful both for investors and policy makers. Thus the research of the stock market bubble has always been the focus in academic research field. But as the downward deviation of price, the negative bubble is off the beaten track. Analysis the stock market now in the new stage, we find that the bubble after the bubble burst in 2007 the stock market has experienced a long period of downturn, especially since 2011. The situation indicates the existence of negative bubble. And negative bubble will cause the confidence declining of the investors thus the stock market will lose the resource allocation function. Therefore, the research on negative stock market bubble is also significant now.This article is mainly about the bubble and negative bubble. By calculating the cyclically adjusted P/E ratio and bubble degree based on the adjusted F-O model, we can measure the bubble and negative bubble size in China’s stock market. The result shows that during 1995-2013, the speculative bubbles exist in 9 years and the peak appears in 2007 in which the speculative bubble degree reached 89.85%. In the recent three years, there exists negative bubbles and have accumulated year by year. To prevent and control the bubbles, the government should establish early-warning mechanism and innovate and perfect the stock market system. Hope this will play a positive role in the healthy and sustainable development of China’s stock market and stabilizing the development of financial and economic market. |
