Hong Kong unrest and implications for the Hang Seng Index

Abstract

With the September 2014 ‘Umbrella Revolution’ in Hong Kong, China faced one of the biggest political challenges since the Tiananmen Square events. Beijing’s proposed electoral reform was perceived as a direct attack to democracy, and the ensuing protest triggered concerns amid local and international investors; the financial sector took the hardest hit, with stocks of companies exposed to the Hong Kong market facing significant losses. Volatility continued to increase to a seven-month high over worries that the student blockade in Hong Kong’s streets could drag on for longer than expected. The econometric-based analysis in this paper looks at the implications of the protest and its spillover effect on the Hang Seng Index with a focus on sectoral performance. The ultimate objective is to gain a better understanding of the impact of the protests on different stocks and sectors with the goal of identifying market vulnerability and potential volatility patterns.

Keywords:

• Hong Kong political unrest
• Hang Seng Index
• volatility
• spillover effects and growth

JEL CLASSIFICATION:

• F30
• F65
• G15

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Lucía Morales

Lucía Morales holds qualifications in the fields of Economics, Finance, Education and Time Series Analysis. Her specialist subject area cover issues in international economics and finance, emerging markets, economic and financial crises, financial market integration, contagion energy economics, commodity markets, international capital markets, education, critical thinking and learning. Over the years, her main research interests look at the integration and application of her research output in the context of her teaching and learning strategies. She aims to contribute to the development of teaching and learning in Higher Education that is linked to the analysis of the world economy and how traditional theories need to be updated and considered in the context of current economic and financial dynamics.

Bernadette Andreosso-O’Callaghan

Bernadette Andreosso-O’Callaghan is a graduate in Economics of the College of Europe (Bruges, Belgium), of the University of Paris Panthéon-Sorbonne (MSc) and of the University of Science and Techniques of Lille (PhD Econ.). She is Jean Monnet Professor of Economic Integration at the Kemmy Business School of the University of Limerick (Ireland) and she is also an International Research Fellow at the Ruhr Universität Bochum (Germany). She has published in the areas of comparative Europe-Asia economic integration, and of economic growth and structural change in Asian countries, with a focus on East-Asian countries.