Abstract
In a DID model, this study examines the impact of the coronavirus disease 2019 (COVID-19) pandemic on the investor sentiment in the financial market of China using monthly panel data on newly listed Chinese companies between October 2019 and June 2020. The outbreak of the pandemic is shown to exert a significant negative impact on investor sentiment. A future industry heterogeneity analysis shows that the pandemic has driven up investor sentiment in the pharmaceutical sector while having a significantly negative impact on non-pharmaceutical sectors. The pandemic is shown to have a negative impact on the private sector and foreign-invested sector in China while a significantly positive impact on the state-owned sector. This study contributes to the existing literature on the investigation of how significant the impact of public health emergencies on investor sentiment is.
Highlights
The 2020 outbreak of the coronavirus disease 2019 (COVID-19) pandemic, a global public health crisis, has hit the Chinese economy and the world economy hard
The explanatory variable post × treat equaled to −0.0552 and was significant at the 1% level, indicating that the outbreak of the pandemic drove down the turnover rates on the A-share stock market and led to pessimistic investor sentiment
To evaluate how and to what extent the COVID-19 pandemic exerts an impact on investor sentiment, this study conducted research on the performance of the A-share stock market of China during the pandemic by doing a quasi-experiment based on the pandemic
Summary
The 2020 outbreak of the coronavirus disease 2019 (COVID-19) pandemic, a global public health crisis, has hit the Chinese economy and the world economy hard. The impact of the COVID-19 pandemic on the financial market of China is substantial. This study is intended to contribute to the understanding of this issue by looking at the impact of the COVID-19 pandemic on investor sentiment in the financial market of China. This study uses a difference-in-difference (DID) model to study the impact of the COVID-19 pandemic on investor sentiment in the financial market of China. This study focuses on the following variables: trading volume, free float equity, market value, financial indicators, etc., trying to study the impact of major economic shocks on investor sentiment in theA-share market of China. This study has important policy value for economic policies in responding to major public health incidents, stabilizing the Ashare market, and safeguarding economic development in China.
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