How does Covid-19 affect global equity markets?

Eddie C. M. Hui () and Ka Kwan Kevin Chan ()
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Eddie C. M. Hui: The Hong Kong Polytechnic University
Ka Kwan Kevin Chan: The Hong Kong Polytechnic University

Financial Innovation, 2022, vol. 8, issue 1, 1-19

Abstract: Abstract This study applies OLS, panel regression and Granger causality test to investigate the impact of the Coronavirus disease 2019 (Covid-19) outbreak on the global equity markets during the early stage of the pandemic. We find that the Covid-19 outbreak has a significant negative impact on the overall equity index return of the eight economies even at 0.1% significance level. Furthermore, the pandemic has a more significant impact on the European countries than on the East Asian economies. The results have three main implications. Firstly, policy makers should react fast to mitigate the impact of a crisis. Secondly, investors should be aware of an outbreak of disease or other risks and adjust their investments accordingly. Furthermore, the Covid-19 outbreak results in a shift of power from the west to the east.

Keywords: Covid-19; Confirmed cases; Panel regression; Equity index (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:fininn:v:8:y:2022:i:1:d:10.1186_s40854-021-00330-5

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DOI: 10.1186/s40854-021-00330-5

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