Research On The Impact Of Air Quality On Stock Market

The stock market has always been a hot topic of concern to all sectors of society.The stock market reflects the expectations of market participants such as investors and policy makers.The Chinese stock market is a non-effective market,and from the perspective of behavioral economics,sentiment and positive or negative expectations of investors,investor risk appetite and investors' limited attention are all important factors which lead to the volatility of the stock market.As an increasingly important environmental and social issue,air quality affects the stock market through emotional effects and expected effects,and affects different regional and industry indices in different levels.This paper aims to link air pollution with stock market based on the current situation that air pollution is highly valued,to study the impact of air quality on the stock market.This paper takes the CSI 300 Index as a sample of research data,considers the attention of market participants,builds comprehensive air quality indicators and extreme air quality indicators based on AQI index,baidu index and media index.This paper uses Pearson correlation test,Logit regression and multiple linear regression to establish empirical models,and a case analysis method is combined to explore the quantitative relationship between air quality and the stock market.The empirical design results show that the air quality variable does not significantly changes the active level of trading activity through investor's sentiment significantly;in the expected transmission mechanism,air pollution will affect the investor's trade decision and ultimately lead to changes in stock yield.The effects of air quality variables on stock indices in different regions and industries are also different.From a regional perspective,the Beijing index is more significantly affected by the local air quality than the Shanghai index,maybe indicating that the more concerned regional stock index is more affected by smog pollution,mainly expressed in the volume indicator.Before and after G20 summit,the air quality in Hangzhou was significantly improved.The correlation between the air quality and the stock index of the local regional index increased to some extent during the meeting.From an industry perspective,For all industries,,the worse the air quality,the higher the volume of the industry index,indicating that investors will make changes in trading decisions on air pollution,thereby increasing the volume;In the extreme range of good air quality,the air quality indicators of most industries have a certain impact on the stock amplitude,and its impact is greater than the extreme range of poor air quality;In the interval of good air quality,with the air pollution more serious,the yield of CSI 300 index significantly reduce.While in the area of severe air pollution,with the air pollution more serious,the yield of CSI300 index is slightly higher.