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Real estate as a new equity market sector: Market responses and return comovement

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  • Hongfei Tang
  • Kangzhen Xie
  • Xiaoqing Eleanor Xu

Abstract

This study examines the market responses and return comovement between real estate and financial stocks around the reclassification of real estate firms from the financial sector to a standalone new real estate sector. We find that real estate stocks experience positive abnormal returns at the announcement of new sector creation, and attract more investor attention after the announcement. In addition, the comovement between real estate and financial stocks decreases dramatically after the new sector creation. These findings demonstrate the market impact of new real estate sector creation and provide important implications for real estate investors, portfolio managers, and policy makers.

Suggested Citation

  • Hongfei Tang & Kangzhen Xie & Xiaoqing Eleanor Xu, 2022. "Real estate as a new equity market sector: Market responses and return comovement," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(2), pages 431-467, June.
    • Handle: RePEc:bla:reesec:v:50:y:2022:i:2:p:431-467
    DOI: 10.1111/1540-6229.12314
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