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Short term response of Chinese stock markets to the outbreak of COVID-19

Author

Listed:
  • HaiYue Liu
  • Yile Wang
  • Dongmei He
  • Cangyu Wang

Abstract

China’s economy and the Asian stock markets have been severely impacted by the COVID-19 outbreak. This article used an event study method to calculate the abnormal returns (AR) in the 10 trading days following the outbreak, from which it was found that both the Chinese and Asian stock markets had significantly declined, with the cumulative abnormal returns (CAR) remaining negative in all the examined event window periods. This article also analysed the different industry index responses to the epidemic, from which it was found that the pharmaceutical manufacturing, software and IT services both had positive CAR, while transportation, lodging and catering had negative CAR during the event window. These results reflected the investors’ expectations for the different industries and the economy as a whole under the outbreak of the contagious coronavirus.

Suggested Citation

  • HaiYue Liu & Yile Wang & Dongmei He & Cangyu Wang, 2020. "Short term response of Chinese stock markets to the outbreak of COVID-19," Applied Economics, Taylor & Francis Journals, vol. 52(53), pages 5859-5872, November.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:53:p:5859-5872
    DOI: 10.1080/00036846.2020.1776837
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