Stock Exchanges and COVID-19

Chinese stock exchanges are below the start of the year.

A Facebook post claimed, unlike other stock exchanges, Chinese stock exchanges had grown. The claim refers to changes “within one month”.

This claim is unclear, and likely to be misleading. Between 18th February and 17th March 2020, a Shanghai and Shenzen composite index had fallen by 9%.

Stock check

A post on Facebook compared stock indices in different countries. The figures refer to “the impact of coronavirus on stock exchanges worldwide”. It shows different countries with their flags. The author claims Chinese stock exchanges grew by 0.3% “within one month”.

These figures are used to suggest the Chinese government sought worldwide economic trouble.

This post was shared on 18th March 2020. (Image: Facebook)

There are many issues with this claim. Some countries have more than one major stock exchange, and several indices.

In the United States, we could measure the performance of ‘stocks’ by:

  • Dow Jones Industrial Average: 30 largest companies on US exchanges.
  • S&P 500: 500 largest companies listed on US stock exchanges, weighted by company value.
  • Wilshire 5000: the 5,000 largest companies on US exchanges, weighted by company value.

China has two major stock exchanges, in Shanghai and Shenzen. Financial data companies like Bloomberg measure a composite of these two exchanges. That index seeks to replicate the performance of the top 300 traded stocks.

It is unclear what the start date for each country is. Restricting the view to “within one month” means missing further declines. It is likely to be misleading.

Between 18th February and 17th March 2020, that index fell by 9%. In that period, the FTSE 100 (UK) index decreased by 28%. The Dow Jones (USA) index fell by 27%.

There have been single days of recovery. (Image: Bloomberg)

Looking at the last six months, the SHSZ 300 index:

  1. Increased in December and January 2020;
  2. Fell from around 20th January, then recovered;
  3. Decreased again from the start of March, to below its February nadir.

The post is unclear about what stock indices they chose, and over which dates. Chinese stock exchanges are now lower in value than they were at the start of the year.

This blog looks at the use of statistics in Britain and beyond. It is written by RSS Statistical Ambassador and Chartered Statistician @anthonybmasters.

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