Influence network in Chinese stock market

TL;DR

This paper constructs and analyzes an influence network among Chinese stock market companies, revealing sector-specific influence patterns and identifying key companies based on network centrality.

Contribution

It introduces a novel influence network model for Chinese stocks and uncovers sector-dependent influence structures and influential companies.

Findings

Large companies tend to lead market trends.

Influence relationships vary significantly across economic sectors.

Centrality-based rankings differ from asset-based rankings.

Abstract

In a stock market, the price fluctuations are interactive, that is, one listed company can influence others. In this paper, we seek to study the influence relationships among listed companies by constructing a directed network on the basis of Chinese stock market. This influence network shows distinct topological properties, particularly, a few large companies that can lead the tendency of stock market are recognized. Furthermore, by analyzing the subnetworks of listed companies distributed in several significant economic sectors, it is found that the influence relationships are totally different from one economic sector to another, of which three types of connectivity as well as hub-like listed companies are identified. In addition, the rankings of listed companies obtained from the centrality metrics of influence network are compared with that according to the assets, which gives inspiration to uncover and understand the importance of listed companies in the stock market. These empirical results are meaningful in providing these topological properties of Chinese stock market and economic sectors as well as revealing the interactively influence relationships among listed companies.