Reaction of US and Chinese Stock Markets to COVID-19 News

Hock-Ann Lee, Venus Liew, Mohd Fahmi Ghazali and Samina Riaz
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Hock-Ann Lee: Labuan Faculty of International Finance, Universiti Malaysia Sabah, Jalan Sungai Pagar, Labuan F.T. 87000, Malaysia
Mohd Fahmi Ghazali: Faculty of Economics and Management, Universiti Kebangsaan Malaysia, UKM Bangi 43600, Selangor, Malaysia
Samina Riaz: Business Studies Faculty, Bahria University Karachi, Karachi 75260, Sindh, Pakistan

IJFS, 2023, vol. 11, issue 2, 1-13

Abstract: The COVID-19 outbreak slowed down global economic activities substantially, resulting in unrest in the financial markets, especially in the beginning of the pandemic outbreak. This study aims to investigate if COVID-19 caused abnormal returns in the US and the Chinese stock markets in the beginning of the pandemic outbreak. Event study methodology is adopted for this purpose. This study finds that a significant negative impact appeared immediately after the Wuhan lockdown in the Chinese markets, while the US markets were slow to pick up. The former was more severely hurt after lockdown, while the latter was more brutally affected after COVID-19 was labeled a global threat. COVID-19 also played a significant role in connecting these two stock markets. The US and China should collaborate further in combating this novel and notorious global pandemic.

Keywords: novel coronavirus; COVID-19 pandemic; stock market; abnormal returns; event study (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
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