The Market Value Of China's Stock Market Has Increased By Six Months.

The market value of China's stock market increased by US $1 trillion and 800 billion in six months as turnover volume increased.

Although the Shanghai Composite Index fell 4.5% in the past week, it has risen by 56% since mid July.

Foreign media quoted analysts as saying that the continuation of the bull market will have at least six effects on China's finance and economy.

Since 2008, China has been borrowing heavily, increasing the risks faced by the financial system.

According to Standard Chartered, by the middle of 2014, this debt had reached 251% of gross domestic product (GDP).

Yuan Xiaoyu, an analyst with Yuan Fu securities in Shanghai, said that if the stock market continues to rise, investors' desire will push enterprises to issue shares, thereby helping to reduce their debts.

After the stock market bubble burst in 2007, most Chinese brokerages were struggling, and the possibility of industry consolidation seemed even greater.

Now, if the increase in business makes profit margins too small, the scale of mergers and acquisitions may shrink and the pace will slow.

"Now the valuation is very high and market integration may slow down," said Judy Zhang, a Paris based bank analyst in Hongkong, France.

According to the latest data from China Securities Association, there were 115 brokerages in China in 2013.

The stock market's ability to absorb gold may exacerbate the competition for funds.

Chen Huanming and other Standard Chartered Analysts in Hongkong said in the research report this month that the most vulnerable ones are individuals, small businesses and non listed real estate companies who borrow money through pawnshops, P2P financing platforms and private banks.

They say that if the bull market continues, the additional pressure that may result from this will lead to more default on the least creditworthy borrowers.

Jim Antos, an analyst at Mizuho Securities in Hongkong, said banks may find it more difficult to manage liquidity, which is a cause for concern.

Although analysts disagree, it has been suggested that a rise in the stock market may prompt the government to temporarily cut down the deposit reserve ratio of commercial banks.

RRR aims to promote economic growth, but it may lead to more capital inflows into the stock market, thereby increasing the risk of bubbles.

Lu Ting, economist at Bank of America and Merrill Lynch, said in Hongkong this month that the central bank has been reluctant to act because of concerns about the stock market.

China's banking industry may take advantage of this opportunity to issue shares and replenish capital, which is cheaper than the issuance of subordinated securities called preferred stock.

"The downturn in stock market valuations in the past few years has made it difficult for banks to issue common stocks," Standard Chartered Analysts said.

ICBC's stock price changes show a change in the situation. The share price of the largest bank in China has risen 29% in the past two months.

A long-term bull market may increase the possibility of volatility in China's currency market.

In the week ending December 19th, the 7 day repo rate in the inter-bank market hit the biggest weekly gain in 2014, as new shares and stock prices rose to attract more capital into the stock market.

Liu Changjiang, a fixed income analyst at Anxin securities, points out that the market risk will keep the demand for new shares strong, so the fluctuation of money market is almost inevitable.