Looking back, in the past, China's stock market has also deviated from the economic trend since its opening in late 1991. However, it has played another role as a weathervane of institutional change.

Especially in the bull market, almost every typical bull market with a long history comes from the drive of reform.

In China, the stock market itself was once a major reform, so from the stock market to Deng Xiaoping's southern tour, a huge bull market began to rise. In the past two years, the Shanghai Composite Index has risen by more than 15 times. This is the first big bull market.

The "5. 19 market" in 1999 allowed the bull market to rise again, which lasted for more than two years, and the Shanghai Composite Index doubled. During this period, the reform of "national retreat and private progress" was pushed forward, laying a pattern of diversification of China's economic equity recently.

The third bull market took place in 2005. The Shanghai Composite Index rose strongly after 1000 points and rose more than 6 times in more than two years, reaching a record high of 6124.

As we all know, behind the big bull market is the "split share structure reform", which enables China's stock market to integrate gradually with the international market and achieve full circulation in the system.

The bull market is no exception. The eighteen major institutional changes are releasing the potential of economic development. As I said in last week's column, China's "shift slowdown" is healthy, because slower economic growth comes from market mechanism rather than "government".

As a weathervane of institutional change, China's stock market can be interpreted in three levels: 1, to release the potential of the economy; 2, to boost market confidence; 3, to drive industrial innovation.

In the work report of the National People's Congress, Premier Li Keqiang passionately appealed to "mass entrepreneurship and innovation", which means that the leading force of investment and financing will gradually change from the government at all levels and the state-owned enterprises to the capital market and the private economy.

At the same time, economic potential will pass.

Step by step amplification.

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Rising beyond the expectations of myself and most institutions, I will instinctively think of a classic concept of Behavioral Finance: irrational prosperity.

The original meaning of this concept of finance is: irrational and prosperity. Once institutional change becomes the consensus of most people, it will form positive feedback through the wealth effect of stock market investment, turn into the optimism of investors, and drive more capital into the market, so that more people will have optimistic expectations and even forget.

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The most difficult factor to quantify in the stock market prediction is investor sentiment, and investor sentiment is contagious.

The spread of the spirit in the stock market drives stock prices skyrocketing and plunging, which is unpredictable, just like what Newton said when he bought shares and lost his savings for many years, "I can figure out the orbit of celestial bodies, but can not calculate the craziness of human nature."

If the stock market rises only from the emotional side, it will be difficult to sustain. Substantive institutional changes will continue to drive the pformation of the economy, so that the fictitious wealth of the stock market will become virtual, so that the stock market risks can be turned into danger.

So what is the goal of this system reform? If only the reform of the stock issuing registration system is achieved, the Shanghai Composite Index will achieve the expected goal, so the strength behind the rising stock market is not just the institutional change of the stock market itself.

It can be expected that China's stock market seems to be looking forward to further deepening reform in the future.