The Principle of Behavioral Finance behind the Double-killing of Wanda Group’s Stocks and Bonds

Abstract

On June 22, 2017, the “double-killing of stocks and bonds†of Wanda Group was considered by many to be “irrational and pessimistic†caused by rumors, and it was an irrational and non-logical follow-up behavior of institutional investors affected by negative news. It is undeniable that this incident does have a boost of rumors, but the trading behavior of each institutional investor is based on its response to the interpretation of the signal, which is the result of mutual institutional gaming between multiple institutional investors. Moreover, the reason why rumors can really play a role is mostly because rumors have real support. This paper is based on the double-killing incident of Wanda encounters, focusing on the real support behind the rumors on the investment decisions made by investors, and analyzing the emotions and psychology in the investor transaction process.