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How Volatility and Herding of the Stock Markets in the Oceania Region Influence Investors and Policymakers: A Sector-Wise Exploration in Pre and Post-COVID Period

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  • Swarnil Roy
  • Sk. Riad Arefin
  • Avijit Mallik

Abstract

The paper probes the sector-wise presence of volatility persistence, herding behavior and corresponding implications on investors and policymakers in the Oceania region both in Pre-COVID & Post-COVID era. The inspection is based on seven identical sectors from both Australia and New Zealand using GARCH (Generalized autoregressive conditional heteroscedasticity) methods for volatility analysis and CSAD (Cross-Sectional Absolute Deviation) method for herding behavior. This paper finds the existence of herding behavior only in the consumer discretionary sector for both countries which delineates efficient market conditions for other sectors. The market is highly favorable for the investors in Food & Beverages, IT, and Healthcare sectors in both countries due to the potential growth opportunity while Real Estate and Financial sectors should be meticulously assessed in line with the alteration of macroeconomic forces. Fiscal and monetary measures along with the influx of labor forces and technological breakthroughs should be the key concentrations for the policymakers of both countries.

Suggested Citation

  • Swarnil Roy & Sk. Riad Arefin & Avijit Mallik, 2023. "How Volatility and Herding of the Stock Markets in the Oceania Region Influence Investors and Policymakers: A Sector-Wise Exploration in Pre and Post-COVID Period," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(1), pages 1-24, January.
    • Handle: RePEc:ibn:ijefaa:v:15:y:2023:i:1:p:24
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    References listed on IDEAS

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    1. Markus Brueckner & Joaquin Vespignani, 2021. "COVID‐19 Infections and the Performance of the Stock Market: An Empirical Analysis for Australia," Economic Papers, The Economic Society of Australia, vol. 40(3), pages 173-193, September.
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    5. Kim, Jong-Min & Kim, Dong H. & Jung, Hojin, 2021. "Estimating yield spreads volatility using GARCH-type models," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    6. Chen, Rongda & Bao, Weiwei & Jin, Chenglu, 2021. "Investor sentiment and predictability for volatility on energy futures Markets: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 112-129.
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    Cited by:

    1. Zhao, Zichao & Li, Dexuan & Dai, Wensheng, 2023. "Machine-learning-enabled intelligence computing for crisis management in small and medium-sized enterprises (SMEs)," Technological Forecasting and Social Change, Elsevier, vol. 191(C).

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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