Specifically, an unanticipated tightening of monetary policy raises expected risk premiums on stocks for a protracted period. For a given expected stream of dividend payouts and real interest rates, the risk premium and hence the return to holding stocks can only rise if the current stock price falls.
He has underscored the importance of following market-oriented and law-based reform approaches and drawing on international practice to promote the healthy development of the stock market, particularly the STAR Market. Also he has put forward requirements on accelerating the development of Shanghai as an international financial center, which are highly instructive as to what we should do in the financial field to provide support.