When monetary policy is changed, it will be announced in advance. So the macro policy in China can be argued to be much more volatile than in market economies. And, on the micro level, people s evaluations of what a company is worth is also volatile. There is certainly suspicion of insider-training and other violations. Second, either the experience of stock market investors or the way the stock market is organized may lead to more volatile stock prices, even though the fundamentals remain constant.
People often fail to translate the fundamentals into stock prices.
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