Does Patent Help to Build Investment Portfolio of China A-Shares under China-US Trade Conflict?

Yu-Jing Chiu, Kuang-Chin Chen and Hui-Chung Che

Mathematical Problems in Engineering, 2020, vol. 2020, 1-12

Abstract:

Patent, a legal representation of innovation achievement, is strongly meaningful for almost every country’s economic growth and technology development. China, the world’s no. 2 stock market, is the world’s largest patent application country. In this study, we observed 2,197 China-listed companies of Renminbi (RMB) common stocks (A-shares) from 2016 to 2018. The relationship among 570 valid patent indicators and financial indicators of the stock price, Return-on-Assets (ROA), and Return-on-Equity (ROE) was examined. We constructed patent leading indicators, patent kernel indicators, and patent prediction equations for predicting the stock price, ROA, and ROE using the Granger causality test and the dynamic time series forecast model. The stock performance of investment portfolios based on patent prediction equations was thoroughly discussed. We found that investment portfolios constructed by the higher predictive ROA, the higher predictive ROE, and the higher predictive stock price growth rate have better performance than the A-shares’ average. The underlying concept behind this study is that despite the overall economic environment fluctuation and the China-US trade conflict, the patent-based algorithm proposed was proved to be useful to discover good investment portfolios.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://downloads.hindawi.com/journals/MPE/2020/7317480.pdf (application/pdf)
http://downloads.hindawi.com/journals/MPE/2020/7317480.xml (text/xml)

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:hin:jnlmpe:7317480

DOI: 10.1155/2020/7317480

Access Statistics for this article

More articles in Mathematical Problems in Engineering from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().