The Impact of the COVID-19 Pandemic on the Malaysian Stock Market

Zulkefly Abdul Karim (), Lay Qin Yi, Bakri Abdul Karim and Siti Farah Dilla Zakaria
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Zulkefly Abdul Karim: Universiti Kebangsaan Malaysia
Lay Qin Yi: Hong Leong Bank Berhad
Bakri Abdul Karim: Universiti Malaysia Sarawak
Siti Farah Dilla Zakaria: Tun Ismail Ali Distinguished Chair (YTI-UKM), Universiti Kebangsaan Malaysia

A chapter in Contemporary Issues in Finance, Investment and Banking in Malaysia, 2024, pp 65-79 from Springer

Abstract: Abstract The COVID-19 pandemic has been shattering the world since the beginning of 2020 and has caused an enormous impact on the stock markets. Malaysia, a small and open economy, was equally affected by the pandemic. This is reflected in the Movement Control Order (MCO) implementation, which ceased most of the economic activities and consequently affected the Malaysian stock market. Therefore, this study aims to examine the impact of COVID-19 on the FTBM Kuala Lumpur Composite Index (KLCI) and 13 other sectoral indices using the Autoregressive Distributed Lag (ARDL) model. Using the sample period from 5 February 2020 to 31 December 2020, the main results showed that the increase in COVID-19 cases in Malaysia and globally still positively impacted the KLCI and all sectoral indices during this period. The findings of this study bring implications for investors, investment institutions, and policymakers in the following aspects. First, this study helps investors in determining strategies to manage their portfolios. This study also assists investment institutions in identifying risks in each sector during the pandemic. Finally, this study helps policymakers set policies to maintain stock market stability while facing market shocks like this pandemic. This study is relevant in increasing perspectives to help all stakeholders execute the best decisions, especially with the COVID-19 pandemic still active worldwide.

Keywords: Stock market; Pandemic COVID-19; Asset pricing; ARDL (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/978-981-99-5447-6_5

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