The Impact Of Supply-side Reform On The Stock Price Of The Steel Industry

The steel industry is a typical representative of overcapacity.In 2016,China began to implement supply-side structural reforms in the steel industry.After long-term efforts,the supply-side reform of China's steel industry has achieved initial success,eliminating inferior steel products "ground bar steel",eliminating excess capacity,improving supply and demand,and improving the quality and price of steel products to a certain extent.Compared with before the supply-side reform,the capacity utilization rate of the steel industry has made significant progress.The supply-side reform has effectively reversed the phenomenon of "bad money expelling good currency" in the steel industry,and the phenomenon of environmental pollution has been suppressed.The steel industry has already got rid of The previous loss situation gradually returned to normal profit levels.By observing the stock market of listed companies in the steel industry,it can be found that before the supply-side reform,the overcapacity in the steel industry is more serious,the price of steel products is lower,the company's profitability is limited,and many companies have suffered losses.The stock performance is not optimistic.However,with the strong implementation of supply-side structural reforms,the stocks of the steel industry have changed from unpopular stocks to popular sectors,with strong performance,significant price increases,and the company's profitability has improved.The stock price can reflect the current operating status of the company,its position in the industry,and the expected profitability.The rise in the stock price of the steel industry shows that the current development of the steel industry is in good shape,and the bullish sentiment of investors is greater than the bearish.This article takes the steel industry as an example to study the impact of supply-sidereforms on stock prices.First,select the data from the China Commercial Industry Research Institute to conduct a general descriptive statistical analysis of the current status of the steel industry.It is found that the number of steel companies and the number of loss-making companies have declined significantly in recent years.After reaching a minimum in 201 5,it started to rise steadily.Then carry out empirical analysis.The empirical analysis is divided into two parts,regression analysis and event research model.In the regression analysis section,firstly select the Shenwan Tier 1 industry steel index as the representative of the steel industry stocks,download the monthly data of trading time,yield and trading volume from January 2012 to December 2019,and then from the China Commercial Industry Research Institute The steel industry analysis report and the website of the National Bureau of Statistics download the capacity utilization rate and operating income index data of the steel industry.Taking stock yield,trading volume,capacity utilization,and operating income as the four main variables,these time series data were tested for unit root with Eviews 8.0 software.It was found that all four variables have unit root and are unstable.The first-order difference becomes a stationary time series.Then use the stable time series data to perform the next Granger causality test.The Granger causality test is a statistical method to test whether one group of variables is the cause of another group of variables.The test results show that the capacity utilization rate is causing the stock return and The reasons for changes in trading volume and operating income are also the reasons for changes in stock returns and trading volume.So the next step of regression analysis is to use the stock return rate and trading volume as the explanatory variables of the two regression equations,and the capacity utilization rate and operating income are the explanatory variables.A regression model is established to obtain the model results and indicate the capacity utilization rate.And the impact of operating income on changes in stock yields and trading volumes is positive.The second part of the empirical analysis establishes an event analysis model.The event analysis model is to study whether the occurrence of a certain event will cause an abnormal return on the stock.This article selects four typical policies of the supply-side reform on the steel industry to study its impact on stock prices.The 15 days before and after the event are taken as the length of the event window,and the stocks of 27 listed steel companies are used as valid samples to calculate the The normal return rate,excess return rate,and cumulative excess return rate are used to judge the impact of supply-side reforms on the stock price of the steel industry.Model results show that supply-side reform is good news for the steel industry.The introduction of supply-side reform policies has significantly increased the excess return on stocks in the short term.In the end,this article gives suggestions based on the different characteristics of government,enterprises and investors.