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Challenges and Opportunities Brought to the Chinese Economy by Brexit and the New US Administration

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  • Lucía Morales
  • Bernadette Andreosso-O’Callaghan

Abstract

The impact of Brexit and the election of Donald Trump as the 45th US president in the context of stock market reactions and economic policy uncertainty (EPU) within three key zones in ‘the Greater China Region’ (Hong Kong, Taiwan and China Mainland) are examined in this article. The chosen research period is from January 2014 to June 2017, and the EPU Index in the USA and the UK is used as a proxy to measure political uncertainty in two of the world major economies and how they impact on the Chinese stock market. The main contribution of the article can be found in the analysis of how stock market performance can be driven by policy-related uncertainty shocks in the international context. The results show that the stock markets in the ‘Greater China Region’ did not seem to react either to the uncertainty generated by Brexit or to the election of Donald Trump, implying that the Chinese stock markets appear to be quite resilient to the recent political events that have been disrupting the global economy. JEL codes: G58, G15, G18

Suggested Citation

  • Lucía Morales & Bernadette Andreosso-O’Callaghan, 2019. "Challenges and Opportunities Brought to the Chinese Economy by Brexit and the New US Administration," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 18(2), pages 145-171, August.
    • Handle: RePEc:sae:emffin:v:18:y:2019:i:2:p:145-171
    DOI: 10.1177/0972652719846304
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    More about this item

    Keywords

    Brexit; Trump; China; stock markets; economic policy uncertainty;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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