Trump Tweet Impacts on the MSCI World Exposure with China Index - Evidence from An Event Study Deploying Cumulative Abnormal Returns

Abstract

I study US-president’s Trump tweets on the US/China trade relationship and their impact stock valuations of companies with a high China exposure. This event study deploys data from the MSCI World with China Index and identifies potential out-/underperformance using cumulative abnormal returns (CAR). My results are presented based on the full index constitutes using heatmaps to show significance of CARs where applicable. My findings suggest that statistically significant CARs are limited depending on identified tweets and appear volatile depending on the estimation window. A vast amount of statistically insignificant CARs based on Trump tweets on China supports the conclusion that his tweets had an overall low impact on the index companies.