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Discussion on Factors Potentially Triggering Herding Behavior among Chinese Investors: A Case Study of the Ground Weaponry II Sector in the A-Share Market

In: Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026)

Author

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  • Haoran Chen

    (University of Calgary, Schulich School of Engineering)

Abstract

Unlike theoretical research, empirical studies on herding behavior and its triggers in various contexts are relatively rare. This study aims to fill this gap by investigating the irrational herding effect and its contributing factors within the Ground Weaponry II sector (sector code: GWII) of China’s A-share market in 2025. In June, this sector showed significant volatility, partly due to major policy announcements and increased speculative trading. Its share price rose from 2,951.33 yuan on June 3 to 5,735.31 yuan by August 13, representing a rapid increase. This study applied the Cross-Sectional Absolute Deviation (CSAD) model and the Cross-Sectional Standard Deviation (CSSD) model, to examine herding behavior in China’s Ground Weaponry II sector from June 2025. Data on daily stock prices were sourced from the Tongdaxin database and analyzed using Python 3.10 (sklearn library). A nonlinear regression was conducted (a=0.05). Results indicate the emergence of significant herding, likely triggered by government-led restructuring of military enterprises. Individual investors over-interpreted the policy, becoming overly optimistic and engaging in mimicry-driven investment.

Suggested Citation

  • Haoran Chen, 2026. "Discussion on Factors Potentially Triggering Herding Behavior among Chinese Investors: A Case Study of the Ground Weaponry II Sector in the A-Share Market," Advances in Economics, Business and Management Research, in: Xiongfeng Pan & Huaping Sun & Abdul Rauf & Md Rabiul Islam & Liew Chee Yoong (ed.), Proceedings of the 2026 11th International Conference on Financial Innovation and Economic Development (ICFIED 2026), pages 145-154, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-642-5_16
    DOI: 10.2991/978-94-6239-642-5_16
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