Impact of Extreme Climate Events on Chinese Stock Market: Event Study of Typhoons
Research Article
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Impact of Extreme Climate Events on Chinese Stock Market: Event Study of Typhoons

Jiani Hao 1, Siru Lai 2* Yan Tian 3, Hanhe Zhang 4
1 Renmin University of China
2 Macquarie University
3 Oxford College, Emory University
4 University of Nottingham Ningbo China
*Corresponding author: sirulai@outlook.com
Published on 16 September 2025
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AEMPS Vol.217
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-363-5
ISBN (Online): 978-1-80590-364-2
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Abstract

As climate change continues to intensify, it has become increasingly important to assess the impact of extreme weather events on financial markets. This study examines the impact of typhoon landfalls on China's A-share market from 2014 to 2023. The study employs event study methodology, Carhart's four-factor model, and intervention analysis to examine and assess abnormal returns during five major typhoons in key sectors: Hato, Higos, Doksuri, Rammasun, and Maria. The findings suggest that typhoons can have a short-term negative impact on stock market performance, causing temporary market volatility, but the Chinese stock market recover quickly after a typhoon, thus mitigating the long-term financial consequences. These results highlight the resilience of the A-share market and provide valuable insights into how investors and policymakers can better manage the risks associated with climate-related disruptions.

Keywords:

Climate disaster, Typhoon, Event study, Carhart four-factor model, Intervention analysis

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Hao,J.;Lai,S.;Tian,Y.;Zhang,H. (2025). Impact of Extreme Climate Events on Chinese Stock Market: Event Study of Typhoons. Advances in Economics, Management and Political Sciences,217,70-83.

References

[1]. Chen, J., (2024). Global catastrophe bond issuance has surged as extreme weather events take hold. Paper.cnstock.com. Retrieved from https://paper.cnstock.com/html/2024-07/08/content _1940344 .htm

[2]. Ji, Q., Zhao, W., Zhang, D., Guo, K.(2022). Climate Risk Perception and Its Impacts on Financial Markets: Micro-Evidence from Listed Firms in China. China Journal of Econometrics, 2022, 2(3): 666-680 https://doi.org/10.12012/CJoE2021-0067

[3]. Intergovernmental Panel on Climate Change (IPCC). (2021). Sixth Assessment Report. Retrieved from https://www.ipcc.ch/assessment-report/ar6/

[4]. China Meteorological News Press. (2024). Blue Book on Climate Change of China 2024 unveiled. Retrieved from https://www.cma.gov.cn/en/research/news/202407/t20240705_6401691.html

[5]. Worthington, A., & Valadkhani, A. (2004). Measuring the impact of natural disasters on capital markets: An empirical application using intervention analysis. Applied Economics, 36(19), 2177–2186. https://doi.org/10.1080/0003684042000282489

[6]. Kmetz, A., Kruttli, M., Tran, B., Watugala, S. and Yan, A. (2024). Extreme Weather and Financial Market Uncertainty. FRBSF Economic Letter. [online] Available at: https://www.frbsf.org/research-and-insights/publications/economic-letter/2024/01/extreme-weather-and-financial-market-uncertainty/#brigitte-roth-tran.

[7]. Worthington, A., (2008), The Impact of Natural Events and Disasters on the Australian Stock Market: A GARCH-M Analysis of Storms, Floods, Cyclones, Earthquakes and Bushfires, Global Business and Economics Review, 10(1): 1-10

[8]. Li, C., Liu, Y. & Pan, L.(2024). A study of impact of climate change on the U.S. stock market as exemplified by the NASDAQ 100 index constituents. Sci Rep 14, 15468. https://doi.org/10.1038/s41598-024-66109-7

[9]. Lanfear, M. G., Lioui, A., & Siebert, M. (2017). Are value stocks more exposed to disaster risk? Evidence from extreme weather events. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2892948

[10]. ‌Malik, I. A., Faff, R. W., & Chan, K. F. (2019). Market response of US equities to domestic natural disasters: Industry-based evidence. Accounting & Finance. https://doi.org/10.1111/acfi.12484

[11]. Shao, L. B., & Zheng, Z. (2023). Typhoons’ effect, stock returns, and firms’ response: Insights from China. Journal of University of Science and Technology of China, 53(0), 1–1. https://doi.org/10.52396/justc-2022-0157

[12]. China Meteorological Administration (CMA). (2024). Data News: Typhoon generation and landfall numbers are low, 'Yagi' started the process of fall typhoon - China Meteorological Administration government portal. [online] Available at: https://www.cma.gov.cn/2011xwzx /2011xqxxw/2011xqxyw/202409/t20240903_6531065.html?from=singlemessage.

[13]. Dolley, J.C. (1933). Characteristics and Procedures of Common Stock Split-Ups. Harvard Business Review. Apr. 1933, 11, pp. 316-26.

[14]. Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The Adjustment of Stock Prices to New Information. International Economic Review, 10(1), 1–21. https://doi.org/10.2307/2525569

[15]. Box, G. E. P., & Tiao, G. C. (1975). Intervention Analysis with Applications to Economic and Environmental Problems. Journal of the American Statistical Association, 70(349), 70-79. https://doi.org/10.1080/01621459.1975.10480264

[16]. Zhao, J., Yu, S., & Wu, F.(2014). Natural disasters and social violences events and stock prices. Journal of Management Sciences in China, [online] 17(4), pp.1–15. Available at: http://jmsc.tju.edu.cn/jmsc/article/abstract/20140406

[17]. Yin, R., & Newman, D. H. (1999). intervention analysis of Hurricane Hugo's effect on South Carolina's stumpage prices. Canadian journal of forest research, 29(6), 779-787. https://doi.org/10.1139/x99-035

References

[1]. Chen, J., (2024). Global catastrophe bond issuance has surged as extreme weather events take hold. Paper.cnstock.com. Retrieved from https://paper.cnstock.com/html/2024-07/08/content _1940344 .htm

[2]. Ji, Q., Zhao, W., Zhang, D., Guo, K.(2022). Climate Risk Perception and Its Impacts on Financial Markets: Micro-Evidence from Listed Firms in China. China Journal of Econometrics, 2022, 2(3): 666-680 https://doi.org/10.12012/CJoE2021-0067

[3]. Intergovernmental Panel on Climate Change (IPCC). (2021). Sixth Assessment Report. Retrieved from https://www.ipcc.ch/assessment-report/ar6/

[4]. China Meteorological News Press. (2024). Blue Book on Climate Change of China 2024 unveiled. Retrieved from https://www.cma.gov.cn/en/research/news/202407/t20240705_6401691.html

[5]. Worthington, A., & Valadkhani, A. (2004). Measuring the impact of natural disasters on capital markets: An empirical application using intervention analysis. Applied Economics, 36(19), 2177–2186. https://doi.org/10.1080/0003684042000282489

[6]. Kmetz, A., Kruttli, M., Tran, B., Watugala, S. and Yan, A. (2024). Extreme Weather and Financial Market Uncertainty. FRBSF Economic Letter. [online] Available at: https://www.frbsf.org/research-and-insights/publications/economic-letter/2024/01/extreme-weather-and-financial-market-uncertainty/#brigitte-roth-tran.

[7]. Worthington, A., (2008), The Impact of Natural Events and Disasters on the Australian Stock Market: A GARCH-M Analysis of Storms, Floods, Cyclones, Earthquakes and Bushfires, Global Business and Economics Review, 10(1): 1-10

[8]. Li, C., Liu, Y. & Pan, L.(2024). A study of impact of climate change on the U.S. stock market as exemplified by the NASDAQ 100 index constituents. Sci Rep 14, 15468. https://doi.org/10.1038/s41598-024-66109-7

[9]. Lanfear, M. G., Lioui, A., & Siebert, M. (2017). Are value stocks more exposed to disaster risk? Evidence from extreme weather events. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2892948

[10]. ‌Malik, I. A., Faff, R. W., & Chan, K. F. (2019). Market response of US equities to domestic natural disasters: Industry-based evidence. Accounting & Finance. https://doi.org/10.1111/acfi.12484

[11]. Shao, L. B., & Zheng, Z. (2023). Typhoons’ effect, stock returns, and firms’ response: Insights from China. Journal of University of Science and Technology of China, 53(0), 1–1. https://doi.org/10.52396/justc-2022-0157

[12]. China Meteorological Administration (CMA). (2024). Data News: Typhoon generation and landfall numbers are low, 'Yagi' started the process of fall typhoon - China Meteorological Administration government portal. [online] Available at: https://www.cma.gov.cn/2011xwzx /2011xqxxw/2011xqxyw/202409/t20240903_6531065.html?from=singlemessage.

[13]. Dolley, J.C. (1933). Characteristics and Procedures of Common Stock Split-Ups. Harvard Business Review. Apr. 1933, 11, pp. 316-26.

[14]. Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The Adjustment of Stock Prices to New Information. International Economic Review, 10(1), 1–21. https://doi.org/10.2307/2525569

[15]. Box, G. E. P., & Tiao, G. C. (1975). Intervention Analysis with Applications to Economic and Environmental Problems. Journal of the American Statistical Association, 70(349), 70-79. https://doi.org/10.1080/01621459.1975.10480264

[16]. Zhao, J., Yu, S., & Wu, F.(2014). Natural disasters and social violences events and stock prices. Journal of Management Sciences in China, [online] 17(4), pp.1–15. Available at: http://jmsc.tju.edu.cn/jmsc/article/abstract/20140406

[17]. Yin, R., & Newman, D. H. (1999). intervention analysis of Hurricane Hugo's effect on South Carolina's stumpage prices. Canadian journal of forest research, 29(6), 779-787. https://doi.org/10.1139/x99-035

Cite this article

Hao,J.;Lai,S.;Tian,Y.;Zhang,H. (2025). Impact of Extreme Climate Events on Chinese Stock Market: Event Study of Typhoons. Advances in Economics, Management and Political Sciences,217,70-83.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume title: Proceedings of the 4th International Conference on Financial Technology and Business Analysis

ISBN: 978-1-80590-363-5(Print) / 978-1-80590-364-2(Online)
Editor: Lukáš Vartiak
Conference website: https://2025.icftba.org/
Conference date: 12 December 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.217
ISSN: 2754-1169(Print) / 2754-1177(Online)

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