Heightened Herd Behavior in Financial Market Under Covid-19
Battle and Cooperation Among Individual Investors and Institutional Investors
These authors contributed equally
- DOI
- 10.2991/assehr.k.211209.021How to use a DOI?
- Keywords
- Grouping investor; Herd behavior; Gamestop; Stock market
- Abstract
In recent years, the phenomenon of trouping investors, both individual and institutional, has become more frequent and common in China and the U.S., especially under the circumstance of COVID 19, which has wreaked havoc in all sectors including the financial market. The market has witnessed increased volatility caused by herd behavior among retail investors and institutional investors. This article will focus on the interaction between retailer and institutional investors and the herd behavior within institutional investors. The battle between individual investors and institutional investors can be studied from the GameStop context. Individual investors have banded together from Reddit to push up GME’s stock price in an attempt to hurt the Wall Street established big institutional investors who are shorting GME. This demonstrated the rising power of individual investors and the influence of social media. This herd behavior indicates a change in power dynamics in the financial market. The second manifestation of heightened herd behavior would be seen in the banding together among institutional investors in Nasdaq and in China’s financial market. In Nasdaq, investors have come together to invest in technology stocks, whereas in China’s financial market, big institutions focused on buying A-shares heavily. This coordination and focus have also increased volatility. Thus, the heightened herd behavior under Covid-19 has indicated a change in the power dynamic between individual investors and institutional investors, which caused the increased volatility in the financial market. Individual investors, institutional investors, and the government should take note of such heightened herd behavior and take appropriate actions to guard themselves against this heightened herd behavior.
- Copyright
- © 2021 The Authors. Published by Atlantis Press International B.V.
- Open Access
- This is an open access article under the CC BY-NC license.
Cite this article
TY - CONF AU - Sijin Lyu AU - Yafan Wang AU - Mengru Zhang PY - 2021 DA - 2021/12/15 TI - Heightened Herd Behavior in Financial Market Under Covid-19 BT - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) PB - Atlantis Press SP - 128 EP - 134 SN - 2352-5428 UR - https://doi.org/10.2991/assehr.k.211209.021 DO - 10.2991/assehr.k.211209.021 ID - Lyu2021 ER -