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Investigating the impact of Covid-19 pandemic on stock markets:Evidence from global equity indices

Author

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  • Mustapher Faque

    (Financial Economics, Gradutate School of Business, Ibn Haldun University, Istanbul, Turkey)

  • Umit Hacioglu

    (Professor of Applied Finance & Business Strategy, School of Business, Ibn Haldun University, Istanbul, Turkey)

Abstract

This paper aims to examine the impact of Covid-19 pandemic on stock markets. This paper also analyses the stock market cointegration of selected global equity indices that performed better and have a quick speed of recovery during the pandemic. This paper also questions how increasing uncertainty and volatility deters investors’ perception of the diversification of equity investments. The dataset for the selected 12 global equity indices has been used from Thompson Reuters’s EIKON database in a given period of time between 2010 and 2021. This paper employs Vector Error Correction Models to assess the relationship among the selected global equity indices. Findings demonstrate that (i) there is an adverse impact of Covid-19 on the Global Equity markets, (ii) there is a clear sign of cointegration in global equity indices, (ii) investors can benefit from investing in particular equity indices that have exhibited quick speed of recovery from the pandemic records lows. The findings finally provide a strong foundation for constructing a resilient equity portfolio in a highly uncertain market environment. Key Words:Covid-19, Cointegration, Diversification, Global Equity Indices, Pandemic

Suggested Citation

  • Mustapher Faque & Umit Hacioglu, 2021. "Investigating the impact of Covid-19 pandemic on stock markets:Evidence from global equity indices," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(7), pages 199-219, October.
    • Handle: RePEc:rbs:ijbrss:v:10:y:2021:i:7:p:199-219
    DOI: 10.20525/ijrbs.v10i7.1461
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    2. Mustapher Faque, 2021. "Cash management strategies and firm financial performance: A comprehensive literature review," Bussecon Review of Social Sciences (2687-2285), Bussecon International Academy, vol. 3(4), pages 23-30, October.
    3. Nanang Suryadi & Rila Anggraeni & Dandi Ariyanto & Muhammad Fajrul Islam, 2021. "The effect of the COVID-19 pandemic on consumer behaviors: A study on gen-z in Indonesia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(8), pages 313-318, December.

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