Research On The Impact Of Sino-US Trade Friction On Stock Market Fluctuations

Since March 2018,Sino-US trade frictions have intensified,and the Chinese stock market as a whole has shown a downward trend.On March 23,2018,the United States decided to impose tariffs on approximately 50 billion U.S.dollars of commodities imported from China,such as aerospace,information and communication technology,and this measure opened the prelude to Sino-US trade friction.On that day,the global stock market showed a sharp decline,and the three major stock indexes of Shanghai and Shenzhen opened sharply lower.On April 4,2018,China decided to impose tariffs on soybeans and other commodities originating in the United States at the same scale,amount,and intensity.Since then,Sino-US trade frictions have escalated and the scale of taxation has continued to expand.On June 19,2018,the United States announced that it planned to impose a 10% tariff on US $ 200 billion in Chinese goods.On August 2,2019,the US stated that it would impose a 10% tariff on approximately US $ 300 billion of goods from China starting September 1.As soon as the news came out,the A-share index fell except for the GEM index.During the period,China and the United States also actively carried out twelve rounds of trade consultations and negotiations,exchanged views on issues of common concern to both sides,and made positive progress,which has eased the tense Sino-US economic and trade relations.In the theoretical part,this article mainly discusses the impact mechanism of SinoUS trade friction on the fluctuation of Chinese stock market from three perspectives of investor sentiment,RMB exchange rate and interest rate.From the perspective of investor sentiment,Sino-US trade friction may affect stock market volatility by affecting changes in investor sentiment,which in turn will cause changes in investor behavior.From the perspective of the RMB exchange rate,Sino-US trade frictions will directly affect RMB exchange rate fluctuations.Changes in RMB exchange rate will affect stock market fluctuations through asset portfolio mechanisms,commodity price mechanisms,and trade mechanisms.From the perspective of interest rates,Sino-US trade frictions will affect the fluctuations of interest rates in the financial market,and then affect the stock market fluctuations by changing the investor's asset portfolio,the effective demand of consumers and causing the flow of funds between markets.In the empirical part,this article first uses the event research method to compare the changes in the return rate of the CSI 300 index before and after the Sino-US trade friction event,and studies whether the Sino-US trade friction will affect the stock market return rate.This article also uses empirical models to examine the impact of Sino-US trade frictions on stock market volatility.First,a benchmark regression analysis was conducted on the impact of Sino-US trade friction on the stock market.Sino-U.S.Trade frictions have a wide range of impacts.The sanctions announcements issued by both China and the U.S.also involve multiple industries.Therefore,this paper also selects the daily closing prices of the five major industries of communications equipment,agricultural comprehensive,aerospace equipment,special equipment,and medical equipment to study China and the United States.The heterogeneous effect of trade friction on the fluctuation of industry yields.Considering that there is a time lag between market investors from receiving market confidence to making investment decisions,this paper also studies whether there is a time lag effect of the impact of SinoUS trade friction on stock market volatility.In order to enhance the reliability of the results,a VAR model is also established in this paper,using impulse function and variance decomposition to further analyze the impact and contribution of Sino-US trade friction to stock market volatility.The study found that Sino-US trade friction will have a positive impact on stock market volatility,and this positive impact has a continuity.From an industry perspective,the Sino-US trade friction has a greater positive impact on the medical device industry,and the communications industry has a smaller positive impact.The impulse function results show that in addition to the negative impact of RMB exchange rate fluctuations on stock market volatility,Sino-US trade frictions,shibor interest rates,and investor sentiment all have positive impacts on the stock market,and such shocks are persistent.The results of variance decomposition show that fluctuations in the RMB exchange rate have the greatest impact on stock market fluctuations,followed by shibor interest rates,Sino-US trade frictions,and money supply growth rates.The results of the article show that the Sino-US trade friction will have a continuous positive impact on China's stock market volatility,that is,the Sino-US trade friction will increase the stock market volatility,which is not conducive to economic development.Therefore,both China and the United States should actively promote consultation and negotiation on the principle of equality,and promote the development of Sino-US economic and trade cooperation.In addition,China will also accelerate the transformation of the domestic economic structure and growth mode,and achieve economic development driven by domestic demand and technological innovation.Continue to expand the breadth and depth of opening to the outside world and promote the diversification of foreign economic and trade relations.Preventing large fluctuations in the stock market is of great significance to the steady development of China's economy.It is necessary to prevent the risk of cross-border short-term capital flows caused by the escalation of Sino-US trade frictions,and provide correct policy guidance to stock market investors.Listed companies give appropriate support.