Abnormal Returns on Tourism Shares in the Chinese Stock Exchanges Amid the COVID-19 Pandemic

24 Pages Posted: 17 Jun 2021

Date Written: May 18, 2020

Abstract

This study finds significant immediate adverse impact of the novel coronavirus (COVID-19) pandemic on tourism shares listed in the Shanghai and Shenzhen stock exchanges, in terms of breadth and depth. Overall, prices of these shares plunged by 20% in three consecutive days in response to pandemic fears, before technical rebound set in. Significant negative cumulative abnormal returns after the Wuhan lockdown are identified in 18 out of 21 tourism shares traded in the Chinese stock exchanges. These findings could serve as references for the China Security Regulatory Commission to monitor the market in future pandemic management. Investors are advised to avoid tourism shares the moment there is any suspicious development of virus outbreak in the future. Instead, they could look for opportunity to buy dip after massive market decline at the appropriate timing.

Keywords: Tourism, coronavirus pandemic, COVID-19, Chinese stock exchanges, event study, abnormal returns

JEL Classification: G10, G14, G15

Suggested Citation

Liew, Venus Khim-Sen, Abnormal Returns on Tourism Shares in the Chinese Stock Exchanges Amid the COVID-19 Pandemic (May 18, 2020). Available at SSRN: https://ssrn.com/abstract=3863889 or http://dx.doi.org/10.2139/ssrn.3863889

Venus Khim-Sen Liew (Contact Author)

Universiti Malaysia Sarawak ( email )

Kota Samarahan, Sarawak 94300
Malaysia

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