Highlighting the Dynamics of the Game-Changer: Empirical Evidence from Stock Markets of the Key Players

Abstract

China Pakistan Economic Corredor (CPEC), a predictive game-changer, was perceived to bring favourable changes in the economy of both its players. It was claimed that a boost shall be seen in each sector of the economy especially for Pakistan. Highlighting this key assumption, this study attempts to conduct a comparative analysis of PSX and Shanghai returns for pre and post announcement of CPEC. The time-series data of the two indices i.e. PSX-100 and Shanghai Stock Exchange Composite Index (SHCOMP) is selected ranging from 4th January 2010 to 2nd January 2019. The comparative analysis of both the economy indicates signif icant difference t(2220.237) = 2.872, p = 0.004 before CPEC-announcement and this difference becomes insignif icant post-CPEC announcement t(1654.132) = 0.315, p = 753. Whereas, individual analysis of returns of both the economies indicated a signif icant change for PSX-100 t(1038) = 2.050, p = 0.041 but for SHCOMP this change is not signif icant t(1008) = -0.697, p = 0.486. The f indings of the study reflect the potentials of CPEC to bring changes in Pakistani Stock market than a mature market of China.