Empirical Study and Reflection on the Impact of COVID-19 Pandemic on Chinese A-share Market--Based on Fama French Five-factor Model

Research Article
Open access

Empirical Study and Reflection on the Impact of COVID-19 Pandemic on Chinese A-share Market--Based on Fama French Five-factor Model

Lehua Deng 1 , Qiyan Jiang 2*
  • 1 South China Agricultural University    
  • 2 Da Lian University    
  • *corresponding author 15020440111@xs.hnit.edu.cn
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/15/20230912
AEMPS Vol.15
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-73-7
ISBN (Online): 978-1-915371-74-4

Abstract

The COVID-19 pandemic has caused severe imbalances in the global economy and intensified stock market turmoil worldwide. Based on Fama-French five-factor model, this paper studies China’s A-share market changes before and after the epidemic. The stocks treated by ST (special treatment) and * ST (delisting warning) are screened, excluding companies and banking stocks with shortlisting time. The equities are finally divided into groups using the two-by-three grouping approach. According to the median of the total market value of stocks, the entire sample is separated into two categories: modest market value (S) and large market value (B). The samples are classified into three categories based on the book-to-market ratio's 30% and 70% quantiles: high (H), medium (N), and low (L). Comparing the different times of the impact of the five factors on stock earnings is conducive to explaining the changes in the factors affecting the stock price of listed companies before and after the epidemic. It is possible to analyze which factors have declined and fluctuated after the epidemic, resulting in a decline in stock prices, a slowdown in the growth of listed companies, or even a recession. The analysis of the five-factor model can clarify which factors have led to the decline in stock prices after the beginning of the epidemic, which is conducive to the formulation of related policies and plans by listed companies and makes up for the decline in stock prices and the slowdown in company growth caused by the corresponding decline, which has apparent practical value.

Keywords:

COVID-19 pandemic, Chinese A-share market, Fama-French five-factor model

Deng,L.;Jiang,Q. (2023). Empirical Study and Reflection on the Impact of COVID-19 Pandemic on Chinese A-share Market--Based on Fama French Five-factor Model. Advances in Economics, Management and Political Sciences,15,193-201.
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References

[1]. Zhang Z., Zhu S. and Lv F.: A Study on the Impact Effect of the New Crown Epidemic on the Capital Market. Friends of Accounting(2020).

[2]. Qin Q., Zhou Y.: Deconstruction of the negative psychological reaction of the public in emergencies. Journal of Southwest University (Humanities and Social Sciences Edition)(2006).

[3]. Wang Q., Wang Z., Li S., Xue F.: Short-term impact of "novel coronavirus pneumonia" epidemic on price fluctuation of Chinese stock market. Economic and Management Review(2020).

[4]. Chen F.: The Heterogeneous Impact of novel coronavirus pneumonia Epidemic on Chinese Enterprises--An Empirical Study from the Perspective of Stock Price Fluctuation. Industrial technical economy(2020).

[5]. Chen Y., Shen Y., Wang J.: Financial market response to major public health emergencies. Financial research(2020).

[6]. Liu L., Yao S.: Asset Growth Effect and Market Efficiency--An Empirical Analysis Based on Risk Factors. Journal of Chongqing University (Social Science Edition)(2016).

[7]. Li Z., Yang G., Feng Y., Jing L.: Empirical Test of Fama-French Five-Factor Model in Chinese Stock Market. Financial research(2017).

[8]. Zhou Q.: An Empirical Study on the Influencing Factors of Stock Returns in China's Growth Enterprise Market--Based on Fama-French Five-factor Model. Shandong University(2019).

[9]. Zhang X., Wang Z.: Empirical Study and Regulatory Thinking of US Stock Pharmaceutical Industry under COVID-19 pandemic--Based on Fama-French Three-factor and Five-factor Models. Market Forum(2022).

[10]. Li S., Zhang Q.: Empirical Study and Regulatory Thinking of US Stock Pharmaceutical Industry under COVID-19 pandemic--Based on Fama-French Three-factor and Five-factor Models. Market Forum(2021).

[11]. Li S., Zhang Q.: An Empirical Study on the Impact of COVID-19 pandemic on US Stock Industry and Regulatory Thinking--Based on Fama-French Three-factor and Five-factor Models. Journal of Wuling(2021).


Cite this article

Deng,L.;Jiang,Q. (2023). Empirical Study and Reflection on the Impact of COVID-19 Pandemic on Chinese A-share Market--Based on Fama French Five-factor Model. Advances in Economics, Management and Political Sciences,15,193-201.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies

ISBN:978-1-915371-73-7(Print) / 978-1-915371-74-4(Online)
Editor:Javier Cifuentes-Faura, Canh Thien Dang
Conference website: https://2023.confbps.org/
Conference date: 26 February 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.15
ISSN:2754-1169(Print) / 2754-1177(Online)

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References

[1]. Zhang Z., Zhu S. and Lv F.: A Study on the Impact Effect of the New Crown Epidemic on the Capital Market. Friends of Accounting(2020).

[2]. Qin Q., Zhou Y.: Deconstruction of the negative psychological reaction of the public in emergencies. Journal of Southwest University (Humanities and Social Sciences Edition)(2006).

[3]. Wang Q., Wang Z., Li S., Xue F.: Short-term impact of "novel coronavirus pneumonia" epidemic on price fluctuation of Chinese stock market. Economic and Management Review(2020).

[4]. Chen F.: The Heterogeneous Impact of novel coronavirus pneumonia Epidemic on Chinese Enterprises--An Empirical Study from the Perspective of Stock Price Fluctuation. Industrial technical economy(2020).

[5]. Chen Y., Shen Y., Wang J.: Financial market response to major public health emergencies. Financial research(2020).

[6]. Liu L., Yao S.: Asset Growth Effect and Market Efficiency--An Empirical Analysis Based on Risk Factors. Journal of Chongqing University (Social Science Edition)(2016).

[7]. Li Z., Yang G., Feng Y., Jing L.: Empirical Test of Fama-French Five-Factor Model in Chinese Stock Market. Financial research(2017).

[8]. Zhou Q.: An Empirical Study on the Influencing Factors of Stock Returns in China's Growth Enterprise Market--Based on Fama-French Five-factor Model. Shandong University(2019).

[9]. Zhang X., Wang Z.: Empirical Study and Regulatory Thinking of US Stock Pharmaceutical Industry under COVID-19 pandemic--Based on Fama-French Three-factor and Five-factor Models. Market Forum(2022).

[10]. Li S., Zhang Q.: Empirical Study and Regulatory Thinking of US Stock Pharmaceutical Industry under COVID-19 pandemic--Based on Fama-French Three-factor and Five-factor Models. Market Forum(2021).

[11]. Li S., Zhang Q.: An Empirical Study on the Impact of COVID-19 pandemic on US Stock Industry and Regulatory Thinking--Based on Fama-French Three-factor and Five-factor Models. Journal of Wuling(2021).