Risk Velocity and Financial Markets Performance: Measuring the Early Effect of COVID-19 Pandemic on Major Stock Markets Performance

Musaed S. AlAli
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Musaed S. AlAli: Assistant Professor, College of Business Studies Department of Insurance and Banking, The Public Authority for Applied Education and Training (PAAET), Kuwait

International Journal of Economics and Financial Research, 2020, vol. 6, issue 4, 76-81

Abstract: Capital is coward, money tend to flee the markets during crises periods. In just few days after declaring Coronavirus as a pandemic by the World Health Organization (WHO), major stock markets lost more than 15% of their market capitalization. This study aims to examine the velocity of Coronavirus pandemic effect on major stock markets during the early stages of the pandemic. The study also examines whether or not there was any difference before and after the first confirmed Coronavirus case reported. Using the data on eleven major stock markets, results from this study shows that, out of the eleven markets under study, six markets showed no difference in mean return 30 trading days before and after reporting the first Coronavirus case in these countries. The results also showed that WHO announcement had a more impact on the stock markets performance than the announcements of local health authorities’ announcements. One interesting finding in this research is that there was an inverse relation between the distance of the stock market from Wuhan and the financial performance of that market.

Keywords: Coronavirus; COVID-19; Stock market performance; Risk velocity; OLS regression (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2020:p:76-81

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