The Impact of Russia-Ukraine Conflict on Chinese Military Industry Sector -Based on Event Study

Abstract

The conflict between Russia and Ukraine has had a tremendous impact on the world economy. This paper uses the event study and selects 51 military enterprises in Shanghai and Shenzhen from February 14 to March 4, 2022. The date of the event was set as February 15, and within eight days of the event, the CAAR as a whole was positive. So, the Russia-Ukraine conflict on the Chinese military industry sector had a positive impact, but the impact of the shorter duration, was mainly affected by investor sentiment, and the overall performance of hedging demand. In the long run, the military industry sector will still be driven by fundamentals. Investors need to include the Chinese military industry sector in their portfolios to avoid the risk of geopolitical conflict. It is also important to note that due to the relatively short duration of events, the portfolio needs to be dynamically adjusted and the risk of late price declines cannot be ignored.