Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

Heightened Herd Behavior in Financial Market Under Covid-19

Battle and Cooperation Among Individual Investors and Institutional Investors

Authors
Sijin Lyu1, Yafan Wang2, *, Mengru Zhang3
1HongWen School Qingdao, Qingdao, China
2Raffles Institution (RI), Singapore
3Columbia International College, Hamilton, Canada

These authors contributed equally

*Sijin Lyu. Email: lululuciaaa@126.com
*Yafan Wang. Email: 21WANG976R@student.ri.edu.sg
*Mengru Zhang. Email: 1812139202@qq.com
Corresponding Author
Yafan Wang
Available Online 15 December 2021.
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.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
978-94-6239-483-4
ISSN
2352-5428
DOI
10.2991/assehr.k.211209.021How to use a DOI?
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  -