Trump's Effect on the Chinese Stock Market

33 Pages Posted: 16 Mar 2020 Last revised: 19 Dec 2020

See all articles by Shijun Guo

Shijun Guo

University of Queensland

Yang Jiao

Young Harris College

Zhiwei Xu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Date Written: November 15, 2019

Abstract

U.S. President Donald Trump tweets frequently to communicate his thoughts to the public. We quantitatively evaluate the impact of Trump's China-related tweets on the Chinese stock market. We find that following Trump’s inauguration, his tweets with a positive sentiment significantly increase abnormal returns for the manufacturing industry in the Chinese stock market. Furthermore, an increase in the absolute value of his positive sentiment increases both the trading volume and volatility of the market. The positive effect is more pronounced for those subindustries with high exposure to international trade and stronger business relations with the United States than for other subindustries. The results are robust for various sensitivity tests.

Keywords: Social Media, Trump's Effect, Stock Market, Asset Pricing

JEL Classification: F30, G11, G15, G40

Suggested Citation

Guo, Shijun and Jiao, Yang and Xu, Zhiwei, Trump's Effect on the Chinese Stock Market (November 15, 2019). Available at SSRN: https://ssrn.com/abstract=3541523 or http://dx.doi.org/10.2139/ssrn.3541523

Shijun Guo

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Yang Jiao

Young Harris College ( email )

1 College Street, Young Harris College
Young Harris, GA 30582
United States

Zhiwei Xu (Contact Author)

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.535 Fahuazhen Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

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