Impact of COVID-19 on investor sentiment in China's stock markets

Abstract

Large-scale public health emergencies may exert significant adverse effects on market sentiment. This study utilizes interrupted time series analysis (ITSA) to explore the shift in Chinese investors' sentiment in response to the uncertainties due to the outbreak of the COVID-19 pandemic. The empirical findings demonstrate that COVID-19 had a notable impact on investor sentiment within China's stock markets. Before the outbreak of COVID-19, investor sentiment had been on an upward trend. However, since the onset of the pandemic, there has been a sustained decline in investor sentiment, aligning with the downward trend observed in China's stock markets. Interestingly, the immediate effect of the COVID-19 intervention was positive, briefly boosting investor sentiment. As of 2023, with the conclusion of the pandemic and the Chinese government's decision to end the zero COVID-19 policy, we anticipate resurgence in investor sentiment within China's stock markets.