COVID-19 pandemic effect on trading and returns: Evidence from the Chinese stock market

Tao Bing and Hongkun Ma

Economic Analysis and Policy, 2021, vol. 71, issue C, 384-396

Abstract: Using a daily foreign and institution flows data, this paper studies how institutional and foreign investors respond to the COVID-19 pandemic events in China. The results indicate that during the COVID-19 crisis foreign investors play a market stabilization role showing significant negative feedback trading, whereas institution investors do not stabilize the market. And compared to the pre-COVID-19 period, foreign investors even exhibit stronger negative feedback trading. Further analyses confirm that foreign investors’ negative feedback is mainly driven by their response to negative returns. Moreover, both institutional and foreign investors’ trading show stronger forecastability of future returns during the pandemic period. And the negative returns after foreigners’ selling and positive returns after institutional buying are much stronger during the crisis period.

Keywords: COVID-19; Foreign investors; Institutional investors; Negative feedback trading; Chinese stock market (search for similar items in EconPapers)
JEL-codes: G11 G14 G15 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592621000771
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:71:y:2021:i:c:p:384-396

DOI: 10.1016/j.eap.2021.05.012

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().