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Impact Of Wuhan Lockdown In Early Stage Of Covid-19 Outbreak On Sector Returns In Chinese Stock Market

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  • Liew, Venus Khim-Sen

Abstract

The unprecedented Wuhan lockdown due to the outbreak of the COVID-19 pandemic provides a natural experiment that will elucidate its immediate impact on the stock market. Event study methodology is adopted to identify any short-run abnormal returns in the Shanghai Stock Exchange Composite Index and its ten component sectors. This paper reports empirical evidence on the negative short-run impact of the Wuhan lockdown in the face of the pandemic outbreak on all component sectors of the Shanghai Stock Exchange Composite. The health care and information technology sectors, which helped considerably in the fight against the pandemic, were resilient and outperformed the general market in the Shanghai Stock Exchange despite the lockdown. The other sectors performed at par with the general market. This confirmation of the counter-cyclical nature of the health care and information technology sectors during the lockdown, which enabled them to overcome the pandemic outbreak, provides valuable insights with which investors can adjust their portfolios in similar situations in the future in a timely manner.

Suggested Citation

  • Liew, Venus Khim-Sen, 2021. "Impact Of Wuhan Lockdown In Early Stage Of Covid-19 Outbreak On Sector Returns In Chinese Stock Market," MPRA Paper 107944, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107944
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    File URL: https://mpra.ub.uni-muenchen.de/107944/1/MPRA_paper_107944.pdf
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    References listed on IDEAS

    as
    1. Al-Awadhi, Abdullah M. & Alsaifi, Khaled & Al-Awadhi, Ahmad & Alhammadi, Salah, 2020. "Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    2. Zhang, Dayong & Hu, Min & Ji, Qiang, 2020. "Financial markets under the global pandemic of COVID-19," Finance Research Letters, Elsevier, vol. 36(C).
    3. Liew, Venus Khim-Sen, 2020. "Abnormal returns on tourism shares in the Chinese stock exchanges amid COVID-19 pandemic," MPRA Paper 107987, University Library of Munich, Germany.
    4. Liew, Venus Khim-Sen, 2020. "The effect of novel coronavirus pandemic on tourism share prices," MPRA Paper 107985, University Library of Munich, Germany.
    5. Chia, Ricky Chee-Jiun & Liew, Venus Khim-Sen & Rowland, Racquel, 2020. "Daily New Covid-19 Cases, The Movement Control Order, and Malaysian Stock Market Returns," MPRA Paper 107988, University Library of Munich, Germany.
    6. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    COVID-19 Pandemic; Wuhan Lockdown; Shanghai Stock Exchange Composite Index; Event Window Study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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