A study of market co-movement: The impact of biomechanical EI on investment decisions in the context of trade conflicts

This study examines the impact of biomechanical emotional intelligence (EI) on investment decisions in the context of external uncertainties such as trade conflicts. The study shows that market co-movement is increasing in the context of globalization, especially during trade conflicts, where market volatility increases in tandem and investor emotional volatility rises significantly. Biomechanical EI plays a key role in emotion management by modulating investors’ physiological responses (e.g., heart rate, muscle tension, etc.). Investors with higher emotional intelligence are able to reduce the negative impact of emotional volatility by regulating biomechanical states (e.g., lowering heart rate, relaxing muscles), thus improving rationality and stability in decision-making. Empirical analysis shows that investors with higher emotional intelligence realized excess returns of 2.5% during the 2018 US-China trade conflict, while those with lower emotional intelligence faced losses of 1.2%. This study reveals the important role of emotional intelligence in complex market environments, especially during periods of high volatility, where its biomechanical regulation mechanism helps to enhance the quality of investors’ decisions and optimize risk management.