The Impact Of Zte And Huawei Events On The Communication Industry : Resaerch Based On Event Study Method

The propagation of Trade Protectionism has exacerbated the bilateral trade frictions between the United States and China since Donald Trump won the election.In this case,as the world's leading communications industry leaders,ZTE and Huawei have been subject to US trade sanctions,which can be characterized as the Black Swan incident,became a hotly debated.In this paper,we use the event study methodology for the quantitative analysis of exogenous effects of ZTE and Huawei events on the market of the communication industry.By Comparing the results of the market model with the three-factor model of the Fama-French,found that: ZTE and Huawei event brought a short negative impact to the communications equipment industry;high-traded market-cap stocks response quicker than low circulation market value,but the actual impact of the event on the abnormal cumulative return is little difference;Instead,the negative investor sentiment in ZTE event led a significantly positive abnormal return on domestic chip stocks;the effect of Huawei on 5G related stock is distinctly negative on event day while the follow-up lasting impact is significantly positive.The market's ability to digest information about the same type of events has increased as the Huawei event occurred after the ZTE event.And Huawei event was found to have caused a significantly negative returns to the communications industry and its suppliers only on the day occurred.