Tiananmen Square 1989: the view from financial markets

Richard Burdekin and Xinzhu Li

Applied Economics Letters, 2015, vol. 22, issue 2, 141-147

Abstract: This article examines the effects of the Tiananmen Square incident on Hong Kong stock prices, which fell by more than 22% on the first day of trading after the event. Notwithstanding the expected negative across-the-board impact, we find some partial protection from the worst of the negative effects enjoyed by investors in utility stocks and companies with ownership ties to mainland China. Whereas some of the harder hit sectors enjoyed some degree of catching up after the first 2 months since the crisis, continued underperformance is seen for the hotel and property sectors throughout the empirical testing. The most domestically focused sectors therefore were also the ones that experienced the most lasting damage.

Date: 2015
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DOI: 10.1080/13504851.2014.929622

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