An Empirical Analysis on the China’s Medical Industry under Covid-19 Based on Fama-French model

Department of Economy, Jinan University, 510610 Guangzhou, China

^* Corresponding author: gilgamesh520@stu2019.jnu.edu.cn

Abstract

The global financial markets have been seriously affected by the Covid-19 pandemic, causing widespread and deep-reaching effects since the latter part of 2019. The medical industry, being one of the fundamental sectors, has not been spared from its effects. This empirical study focuses on Chinese A-share medical industry companies as a sample and the Fama-French three-factor and five-factor models were evaluated to determine their effectiveness pre- and post-pandemic, aiming to investigate how the epidemic has impacted the stock prices of China’s medical industry. The results indicate that the epidemic has significantly affected the Chinese A-share medical industry, and the Fama-French model’s capability of explaining market returns has diminished following the outbreak of the epidemic. These findings provide guidance for investors and policymakers to make informed decisions regarding investments and policies related to the medical industry, as well as insights into examining the effectiveness of China’s medical industry stock price. These results also provide ideas and methods for related research in other fields.