Paper: arXiv 2401.13676

Authors: Ziqi Wang

Abstract

Hong Kong’s anti-ELAB movement had a significant impact on the stock market the stock price of listed companies. Using the number of protestors as the measurement of daily protesting intensity from 2019/6/6 to 2020/1/17, this paper documents that the stock price of listed companies associated with the pan-democratic parties were more negatively affected by protesting than other companies. Furthermore, this paper finds that after the implementation of the anti-mask law, protesting had a positive impact on red chips but a negative impact on companies related to pan-democracy parties. Therefore, this paper believes that after the central government and the HKSAR government adopted strict measures to stop violence and chaos, the value of the political connection of red chips became positive while the value of the connection with pan-democracy parties became negative.

Complexity vs Empirical Score

  • Math Complexity: 2.5/10
  • Empirical Rigor: 5.5/10
  • Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper provides a compelling empirical event study analyzing political risk and connections during the 2019-2020 Hong Kong protests. While it relies primarily on basic econometric regression models rather than complex quantitative mathematics, it offers novel localized insights into political connection valuations.

Research Flowchart

  flowchart TD
    A["Research Goal: Assess anti-ELAB movement's impact on politically connected firms in HK"] --> B["Data Inputs: Daily protestor counts (2019/6/6–2020/1/17) & HK stock returns"]
    B --> C["Event Study Methodology: Analyze stock returns against protest intensity"]
    C --> D["Comparative Analysis: Pan-democratic connected vs. Red Chips & neutral firms"]
    C --> E["Policy Impact Analysis: Pre vs. Post Anti-Mask Law implementation"]
    D --> F["Finding 1: Pan-democratic firms suffered greater stock price declines during protests"]
    E --> G["Finding 2: Post-Anti-Mask Law, protests helped Red Chips (+ value) but hurt Pan-democratic firms (- value)"]