Sectoral Betas: Pre and Post CPEC Announcement Comparison
Proceedings of the 29th IBIMA Conference, 3-4 May 2017
10 Pages Posted: 30 May 2017
Date Written: May 4, 2017
CPEC, a mega project that aims to connect Gwadar from Kashghar, is not only a game changer for China and Pakistan but it is for the whole region. This research paper will disclose the impact of the announcement of CPEC on different sectors including cement, automobile, banking, insurance and steel. Excess returns of stock were determined and taken as dependent variable, whereas; excess returns of KSE 100 were taken as independent variable. Simple regression technique was used to interpret beta and sig values. Because of the increased local demand and high import rate, 4 out of 5 betas showed downfall, however; sig values remained highly significant. More local industries to be setup to meet the rise in demand and to maintain the level of betas. It will be a win-win situation for foreign investors as the rate of local manufacturing is comparatively lower than the current demand of goods because of the increased rate of CPEC related developments.
Keywords: CPEC, Sensitivity, Beta, CAPM
JEL Classification: C12, G11
Suggested Citation: Suggested Citation