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Tiananmen Square 1989: the view from financial markets

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  • Richard C. K. Burdekin
  • Xinzhu Li

Abstract

This article examines the effects of the Tiananmen Square incident on Hong Kong stock prices, which fell by more than 22% on the first day of trading after the event. Notwithstanding the expected negative across-the-board impact, we find some partial protection from the worst of the negative effects enjoyed by investors in utility stocks and companies with ownership ties to mainland China. Whereas some of the harder hit sectors enjoyed some degree of catching up after the first 2 months since the crisis, continued underperformance is seen for the hotel and property sectors throughout the empirical testing. The most domestically focused sectors therefore were also the ones that experienced the most lasting damage.

Suggested Citation

  • Richard C. K. Burdekin & Xinzhu Li, 2015. "Tiananmen Square 1989: the view from financial markets," Applied Economics Letters, Taylor & Francis Journals, vol. 22(2), pages 141-147, January.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:2:p:141-147
    DOI: 10.1080/13504851.2014.929622
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    References listed on IDEAS

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    1. Ma, Yulong & Sun, Huey-Lian & Tang, Alex P., 2003. "The stock return effect of political risk event on foreign joint ventures: evidence from the Tiananmen Square Incident," Global Finance Journal, Elsevier, vol. 14(1), pages 49-64, May.
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    Cited by:

    1. Ferrando, Annalisa & Popov, Alexander & Udell, Gregory F., 2017. "Sovereign stress and SMEs’ access to finance: Evidence from the ECB's SAFE survey," Journal of Banking & Finance, Elsevier, vol. 81(C), pages 65-80.

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