An Empirical Study On The Stock Market Reaction To The Establishment Of China (Shanghai) Pilot Free Trade Zone On The Medical Industry

To measure the impact of an economic policy to an industry has always been an important topic in economics, but also in management science. Medical reform is the people’s livelihood issues of the society, but also the hot topics. And the medical industry has the bright prospect for development, which is also recognized as the high-tech industry,is noted for its booming internationalization in the world. Among the promotion of life expectancy, the medical insurance policy changed, the progress of technology and the national strategic positioning, the medical industry, which scale of the rapid expand rapidly, has the higher growth rate than the world economy over the same period, and has become the pillar of industry in the world. The medical industry as non-cyclical industries, doesn’t have better relevance with macro economic, the industry itself has the anti-cyclical strength, but the risk of the medical industry is higher under the policy and emergencies.Above all, it’s important to research the policy response on medical industry.In August 22,2013, the Ministry of Commerce official bulletin: the State Council recently formally approved the establishment of China (Shanghai) Pilot Free Trade Zone, including economical field, financial field, trade field, international shipping. It also approved the establishment of foreign professional pilot health insurance agencies and the establishment of wholly foreign-owned medical enterprises.This is a major change in the reform of the medical and healthcare systems. In addition, it provides more convenience and favorable conditions for the import and export of foreign-funded enterprises and private enterprises in China (Shanghai) Pilot Free Trade Zone, with an indirect and profound impact on the medical industry. With using event study methodology, the paper reserched the performance of medical industry in china’s stock market with the establishment of China (Shanghai) Pilot Free Trade Zone.First, the paper do an empirical test of the influence on the stock on medical industry and the whole stock market. Then the paper did an empirical test of the influence on the stock on different medical sub-industries.Finally, the paper analyzed the causes of the reaction on the establishment of China (Shanghai) Pilot Free Trade Zone in china’s stock market.The results of the study indicated that the establishment of Shanghai FTZ had an impact on the medical industry. The degree of influence on different medical sub-industries, which had not obvious distinctions, were not consistent with each other.