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Trump’s Effect on the Chinese Stock Market

Author

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  • Guo, Shijun
  • Jiao, Yang
  • Xu, Zhiwei

Abstract

U.S. President Donald J. Trump tweets frequently to communicate his thoughts to the public. We quantitatively evaluate the impact of Trump's China-related tweets on the Chinese stock market. We find that following Trump’s inauguration, his tweets with a positive sentiment significantly increase abnormal returns for the manufacturing industry in the Chinese stock market. Furthermore, an increase in the absolute value of his positive sentiment increases both the trading volume and volatility of the market. The positive effect is more pronounced for those subindustries with high exposure to international trade and stronger business relations with the United States than for other subindustries. The results are robust for various sensitivity tests.

Suggested Citation

  • Guo, Shijun & Jiao, Yang & Xu, Zhiwei, 2021. "Trump’s Effect on the Chinese Stock Market," Journal of Asian Economics, Elsevier, vol. 72(C).
  • Handle: RePEc:eee:asieco:v:72:y:2021:i:c:s1049007820301470
    DOI: 10.1016/j.asieco.2020.101267
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    More about this item

    Keywords

    Social media; Trump’s effect; Stock market; Asset pricing;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G40 - Financial Economics - - Behavioral Finance - - - General

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