Investigating the impact of Sino-US trade conflict on the co-movement of stock market between China, US and other East Asian Economies in the perspective of biomechanics and bioinformatics

The Sino-U.S. trade conflict on 22 March 2018 the global system of trade and also the international stock market. This paper introduces the theories of biomechanics and bioinformatics to construct a dynamic analytical model based on Vector Auto-Regression (VAR) to investigate the impact of Sino-U.S. trade conflict on the stock markets of China, U.S. and other Asian economies. By employing concepts from biomechanics, the key variables in the co-movement of stock markets in China, the United States, and East Asia are analogized. The co-movement of stock is treated as a “state variable,” and the “stress and strain” experienced by each country’s stock market under the influence of other markets are analyzed. This approach reveals the patterns of variation within these stock markets and provides a quantitative basis for understanding their dynamics. The granger causality and co-integration analysis are conducted on the empirical daily stock price data from 21 September 2016 to 22 September 2019. Benchmarking on Sino-US trade conflict on 22 March 2018, the data is divided into two phases, including 21 September 2016 to 21 March 2018, and 22 March 2018 to 22 September 2019. The results of this study show that the Asian stock markets seems to be more independent with the U.S. stock market after the Sino-U.S. trade conflict. And the results of the dynamic analysis model based on VAR also suggest that the tariff and the trade barriers not only hurt the relationship between China’s stock market and U.S.’s stock market, but also hurt the relationships of stock markets among U.S.’s and other Asian economies. The results of this empirical study can provide information for both investors and policy-makers to have a sound understanding of the stock market.