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Investigating the financial impact of coronavirus on leading stock indices

Author

Listed:
  • Mitashi Sinha

    (Researcher, Shaheed Sukhdev College of Business Studies, New Delhi, India.)

  • Ritvika Jalan

    (Researcher, Shaheed Sukhdev College of Business Studies, New Delhi, India.)

  • Rohini Singh

    (Associate Professor, Shaheed Sukhdev College of Business Studies, New Delhi, India.)

Abstract

Purpose: The aim of this research paper is to investigate the short-term financial impact of coronavirus disease (COVID-19) on the leading stock markets indices of 20 countries, namely, India, the United States of America, Brazil, Russia, the United Kingdom, Spain, China, Germany, South Korea, France, Abu Dhabi, Taiwan, Thailand, Pakistan, New Zealand, Mexico, Japan, Canada, Singapore, and Australia. Methodology: A comparative and event study has been conducted between index closing prices of aforementioned countries during the COVID-19 outbreak (short-term and long-term basis) and pre-COVID period, keeping the S&P Global 100 closing prices as the benchmark. For this, we have used statistical tools such as t-test and Mann–Whitney U-test and interpreted and analyzed the results thereof. Findings: Since the reaction of aforementioned stock indices has been analyzed under varying time periods for the event study, it was concluded that the announcement of the virus as a pandemic and its subsequent outbreak saw a sudden decrease in market returns, however, the prices recovered quickly. Implication: Even though COVID-19 initially affected investor confidence, it failed to create a long-term impact. Originality: Till now, no research has been conducted to test the effect of the WHO declaring COVID-19 a pandemic.

Suggested Citation

  • Mitashi Sinha & Ritvika Jalan & Rohini Singh, 2020. "Investigating the financial impact of coronavirus on leading stock indices," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 11(3), pages 08-22, September.
    • Handle: RePEc:aii:ijcmss:v:11:y:2020:i:3:p:08-22
    DOI: 10.18843/ijcms/v11i3/02
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    References listed on IDEAS

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    1. repec:aei:rpaper:1008560098 is not listed on IDEAS
    2. Srinivas Nippani & Kenneth Washer, 2004. "SARS: a non-event for affected countries' stock markets?," Applied Financial Economics, Taylor & Francis Journals, vol. 14(15), pages 1105-1110.
    3. Zachary McGurk & Adam Nowak & Joshua C. Hall, 2020. "Stock returns and investor sentiment: textual analysis and social media," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(3), pages 458-485, July.
    4. Ozili, Peterson & Arun, Thankom, 2020. "Spillover of COVID-19: Impact on the Global Economy," MPRA Paper 99317, University Library of Munich, Germany.
    5. Scott R. Baker & Nicholas Bloom & Steven J. Davis & Kyle J. Kost & Marco C. Sammon & Tasaneeya Viratyosin, 2020. "The Unprecedented Stock Market Impact of COVID-19," NBER Working Papers 26945, National Bureau of Economic Research, Inc.
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