IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/121414.html
   My bibliography  Save this paper

Stock price reactions to reopening announcements after China abolished its zero-COVID policy

Author

Listed:
  • Chang, Zheng
  • Ng, Alex Wei Fung
  • Peng, Siying
  • Shi, Dandi

Abstract

As global economies strive for post-COVID recovery, stock market reactions to reopening announcements have become crucial indicators. Though previous research has extensively focused on COVID’s detrimental impact on stock markets, the effects of reopening remain underexplored. This study provides the first causal analysis of the effect of easing restrictions on Chinese firms’ stock prices following the end of China’s three-year Zero-COVID policy. Utilizing regression-discontinuity design, we find that most relaxed measures had minimal or negative impact. However, stock prices jumped 1.4% immediately after the full reopening announcement on December 26, 2022. Using a difference-in-differences approach, we also note a 1.6% increase in the stock prices of Mainland China firms relative to firms in other districts on the Hong Kong stock market two months post-reopening. Our findings offer key insights for policymakers and contribute significantly to academic discourse on the causal relationship between reopening policies and stock market performance.

Suggested Citation

  • Chang, Zheng & Ng, Alex Wei Fung & Peng, Siying & Shi, Dandi, 2024. "Stock price reactions to reopening announcements after China abolished its zero-COVID policy," LSE Research Online Documents on Economics 121414, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:121414
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/121414/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bai, Chenjiang & Duan, Yuejiao & Fan, Xiaoyun & Tang, Shuai, 2023. "Financial market sentiment and stock return during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 54(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pantisa Pavabutr & Bin Zhao, 2024. "Do retail investors gamble more during lockdown?," International Review of Finance, International Review of Finance Ltd., vol. 24(4), pages 572-603, December.
    2. Konstantinos Petridis & Nikolaos Kiosses & Ioannis Tampakoudis & Fouad Ben Abdelaziz, 2023. "Measuring the efficiency of mutual funds: Does ESG controversies score affect the mutual fund performance during the COVID-19 pandemic?," Operational Research, Springer, vol. 23(3), pages 1-29, September.
    3. Jiang, Jiaqi & Zhang, Zhipeng & Cheng, Gongpin, 2024. "Corporate violations, traditional media and stock returns: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 69(PA).
    4. Zheng Chang & Alex Wei Fung NG & Siying Peng & Dandi Shi, 2024. "Stock price reactions to reopening announcements after China abolished its zero-COVID policy," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-9, December.
    5. Biktimirov, Ernest N. & Sokolyk, Tatyana & Ayanso, Anteneh, 2024. "What is behind housing sentiment?," Finance Research Letters, Elsevier, vol. 60(C).
    6. Tsai, I-Chun & Chen, Han-Bo & Lin, Che-Chun, 2024. "The ability of energy commodities to hedge the dynamic risk of epidemic black swans," Resources Policy, Elsevier, vol. 89(C).
    7. Shuxin Yang, 2025. "Pandemic, policy, and markets: insights and learning from COVID-19’s impact on global stock behavior," Empirical Economics, Springer, vol. 68(2), pages 555-583, February.
    8. Walid Mensi & Ismail O. Fasanya & Xuan Vinh Vo & Sang Hoon Kang, 2025. "Dynamics of extreme spillovers across European sustainability markets," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 225-258, March.
    9. Zhang, Pengcheng & Kong, Deli & Xu, Kunpeng & Qi, Jiayin, 2024. "Global economic policy uncertainty and the stability of cryptocurrency returns: The role of liquidity volatility," Research in International Business and Finance, Elsevier, vol. 67(PB).
    10. Szczygielski, Jan Jakub & Charteris, Ailie & Obojska, Lidia & Brzeszczyński, Janusz, 2024. "Capturing the timing of crisis evolution: A machine learning and directional wavelet coherence approach to isolating event-specific uncertainty using Google searches with an application to COVID-19," Technological Forecasting and Social Change, Elsevier, vol. 205(C).
    11. Yunus Emre Turan & Dinara Zubaidullina, 2024. "Relationship between Financial Services Confidence Index and Stock Market Returns: Toda-Yamamoto and Asymmetric Causality Analysis," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(41), pages 97-108, December.
    12. Carlini, Federico & Farina, Vincenzo & Gufler, Ivan & Previtali, Daniele, 2024. "Do stress and overstatement in the news affect the stock market? Evidence from COVID-19 news in The Wall Street Journal," International Review of Financial Analysis, Elsevier, vol. 93(C).
    13. Zhong‑Qiang Zhou & Jiajia Wu & Ping Huang & Xiong Xiong, 2025. "Cross-sectional anomalies and conditional asset pricing models based on investor sentiment: evidence from the Chinese stock market," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-24, December.
    14. Cheng, Tingting & Liu, Fei & Liu, Junli & Yao, Wenying, 2024. "Tail connectedness: Measuring the volatility connectedness network of equity markets during crises," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:121414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.