Sustainability of Stock Market against COVID-19 Pandemic

Chin Lee (), Yong Seong Foo, Kong San Chen, Farhad Taghizadeh-Hesary and Woon Leong Lin

MPRA Paper from University Library of Munich, Germany

Abstract: This study explored the sustainability of the stock market against the COVID-19 pandemic. The impacts of confirmed COVID-19 cases, COVID-19 deaths, and Movement Control Order (MCO) length on the stock market were examined. The Generalized Method of Moments (GMM) estimator was employed to analyze 57 countries’ weekly data from November 4th 2019 to July 5th 2020. The findings showed that the growth in confirmed COVID-19 cases has a significant negative effect on stock market returns, while the growth in COVID-19 deaths has a negative yet statistically insignificant influence on stock market returns. This study also found a non-linear inverted U-shaped relationship between the MCO period and stock market returns, implying that though the MCO has initial positive influences on the stock market, it negatively impacts the stock market after 5.7 weeks. Thus, this study argues that policy responses to the COVID-19 pandemic provide the most compelling explanation for its unprecedented impact on the sustainability of the stock market. Governments should therefore implement a partial lockdown to avoid deterioration of the national economy. Furthermore, government policies and plans to control the COVID-19 epidemic as well as economic stimulus packages to kickstart the economy play crucial roles in boosting economic growth and revitalizing the stock market.

Keywords: COVID-19; Movement Control Order; Stock Market Returns; Non-linear; Sustainability (search for similar items in EconPapers)
JEL-codes: G10 G15 G18 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in International Journal of Economics and Management SI.19(2022): pp. 31-41

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/121422/1/MPRA_paper_121422.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121422

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().