How Chinese Superstition Is Moving American Markets

The World
How It Works
Nov. 26 2013 10:31 AM

China's Lucky Numbers and American Markets

186383887
Very superstitious.

Photo by PHILIPPE LOPEZ/AFP/Getty Images

It’s not a surprise that irrational factors often move markets. Economists in the 1980s, for instance, found that stock market returns were often lower on Friday the 13th. More recently, the viral success of “Gangnam Style” led to a flurry of investment in the Korean semiconductor firm owned by singer Psy’s father. But with the growing importance of Chinese investment, how do traditional Chinese superstitions come into play in modern global markets?

Joshua Keating Joshua Keating

Joshua Keating is a staff writer at Slate focusing on international affairs and writes the World blog. 

A recent paper by Richard Chung of Australia’s Griffith Business School and Bin Li and Ali Darrat of Louisiana Tech looked at the impact of Chinese numerological beliefs on U.S. commodity markets. In Chinese culture, 8 is considered a lucky number while 4 is unluckily.  The Beijing Olympics, for instance, began on 8th day of the 8th month of 2008 whereas many buildings skip the fourth floor the same way many Americans buildings skip the 13th.

Advertisement

In 2011, China bought 58 percent of total U.S. exports of soybeans, 51 percent of copper and 31percent of raw cotton, so if Chinese investors are being superstitious in their behavior, you might expect to see an impact on the prices of these commodities.

And indeed, the “day 4 in the months associated with significantly lower returns” for the three commodities. The effect of lucky days was less evident.

This isn’t the first time this effect has been studied, and as you might expect it seems more pronounced in China itself. A paper last year by economists from UC Irvine and the Nanyang Business School looked at the Chinese IPO market, finding that “the frequency of lucky numerical stock listing codes exceeds what would be expected by chance” and that “newly listed firms with lucky listing codes are initially traded at a premium.”

As Chung, Darrat, and Li note, this effect seems “in conflict with an efficient US commodity market as it opens the possibility for formulating profitable trading rules based on day 4 trading.” In other words, as long as China’s demand for commodities keeps up, it might pay to brush up on your lucky numbers.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

These Companies in Japan Are More Than 1,000 Years Old

  News & Politics
The World
Oct. 21 2014 11:40 AM The U.S. Has Spent $7 Billion Fighting the War on Drugs in Afghanistan. It Hasn’t Worked. 
  Business
Business Insider
Oct. 21 2014 11:27 AM There Is Now a Real-life Hoverboard You Can Preorder for $10,000
  Life
Quora
Oct. 21 2014 11:37 AM What Was It Like to Work at the Original Napster?
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 21 2014 11:34 AM Germans Really Are More Punctual. Just Ask Angela Merkel.
  Technology
Future Tense
Oct. 21 2014 10:43 AM Social Networking Didn’t Start at Harvard It really began at a girls’ reform school.
  Health & Science
Bad Astronomy
Oct. 21 2014 7:00 AM Watch the Moon Eat the Sun: The Partial Solar Eclipse on Thursday, Oct. 23
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.