Investors’ response to real estate investment trust in China

Abstract

Using an event study methodology, this study examines the listing event of the first nine public Real Estate Investment Trusts (C-REITs) to determine whether its introduction impacts China’s capital market. Notably, the cumulative averaged abnormal return of listed infrastructure companies shifts from negative to positive on the event date and continues to increase. Herein, C-REIT launch focuses market’s attention on infrastructure assets through web searches and analyst coverage. This elevates buying and excessive returns of listed infrastructure companies. Notably, the market performance is largely driven by sentiment. However, to some extent, this effectively guides capital and resources toward the infrastructure sector. The findings hold significant implications for investors and policymakers, shedding light on the development of C-REITs. Although the study focuses on short-term effects, it mentions the long-term investment value of C-REITs.