The Impact of the May 12 Wenchuan Earthquake on China's Stock Market -As An Example to the Chenyu Price Index of China

In addition to macroeconomic effects, the stock market conditions also closely relates to a number of unexpected events. The taken place of Wenchuan earthquake on May 12th, 2008, had short-term effects on the stock market, some experienced suspension, but some experienced soaring. 66 listed companies from Sichuan and Chongqing had experienced suspension from 13th of May, due to the earthquake. 45 Shanghai-listed companies from Sichuan and Chongqing suspended; On 14th of May, medicine, agriculture and cement industry stocks rose drastically, there are more than 40 pharmaceutical industry stocks raising more than 10% in the two stock markets. By the GARCH model, this paper analyzes the long-term effects of the earthquake. The results show that the earthquake does not change the general trend of Chinese stock market, except the influencing time is short, and the duration of fluctuating is not long. Thus, long-term impact of the earthquake on Chinese stock market is limited.