A huge building in the middle of the financial center. As we entered the main floor we see a big stage with seatings for audience then behind it is the trading floor with 100 old computers. Screens all around the room with graphs, green and red tickers showing the daily stock activity. Looking around the room I imagined 20 years ago before the internet boom this huge room would be filled with hundreds of people shouting, hearing telephones ringing in the background, and when a stock is increasing in price everyone starts to buy in it so it keeps going up I imagined it like a movie seen.
As we walked through the place there was a finance professor who was giving us a tour of the place. He explained that the place is like museum now, all of the trading now a days happen through the internet. The internet have changed how stock trading is done and made it way faster. With the internet with just pressing a button you can make a transaction, instead of going to a place and finding people who wants to sell then buy from them.
People’s culture and traditions affects business and simultaneously affect the stock market. China is a vey cultural country, they are very high context in communications, they have higher archy structure, decisions take a long time to get executed, and they do not like to report bad news. That all affects the stock market directly and indirectly.
The finance professor was frustrated as he was explaining to us about their stock market. First thing he said “it is an inefficient market”. Chinese companies do not report everything happening, as I said earlier they do not like report bad news; so they always share high profit and good news, people know it is not true so it is not reflected on the stock price. So people trade based on algorithms, or with using insider information and knowing someone who owns big chunk of the stock so they can affect the price. The professor ended with “If you do not know an insider it is very hard to make money”.
I believe with China being more globalized, their market will get efficient but it will take some time.