TITLE:
Could China’s Proactive Carbon Reduction Actions Bring New Investment Opportunities to the Stock Markets?
AUTHORS:
Zhongwei Yu
KEYWORDS:
Dual Carbon Targets, Risk-Return Profile, Green Premium, Portfolio Decarbonization
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.6,
November
23,
2023
ABSTRACT: We study the impact of
China’s proactive carbon reduction actions, as marked by the proposed Dual
Carbon Targets, on the asset prices in China’s equity markets. Our findings
indicate that the proposal of Dual Carbon Targets has led to significant
changes in the risk-return profile of low-carbon assets, while the risk-return
profile of high-carbon assets has not significantly changed. We find that
certain low-carbon assets exhibit significantly abnormal excess returns after
the proposal of Dual Carbon Targets. Utilizing an effective portfolio analysis
approach, our findings suggest that portfolios could yield higher returns by
applying a decarbonization investment strategy against the backdrop of the Dual
Carbon Targets.