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The Impact of Covid-19 on Market Efficiency: A Comparative Market Analysis

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  • Samuel Tabot Enow

    (The IIE Vega School, South Africa)

Abstract

Covid-19 has had severe consequences on the financial systems of many countries and has altered the manner in which most businesses operate. This adverse situation has a spill-over effect on financial markets where the market efficiency may have been altered, hence using pre-Covid-19 strategies for investment purposes may no longer be applicable. Market efficiency, which is closely linked to informational efficiency, depicts the extent to which financial markets adjust quickly and correctly to new information. It is instrumental for fundamental analysis. The aim of this study is to analyze the market efficiency during the pandemic in five major financial markets around the world. Using the runs tests, the results indicate that the market efficiency in the JSE and JPX-Nikkei 400 has been altered significantly, while the Nasdaq Index, DAX, and CAC 40 have not changed from what it used to be. This was evident in the significant difference between the expected number of runs and the total number of runs, as indicated by the runs test. The implication of this study is that investment professionals in the JSE and JPX-Nikkei 400 should alter their investment strategies, without which they may incur severe losses.

Suggested Citation

  • Samuel Tabot Enow, 2021. "The Impact of Covid-19 on Market Efficiency: A Comparative Market Analysis," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(4), pages 235-244.
    • Handle: RePEc:ejn:ejefjr:v:9:y:2021:i:4:p:235-244
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    References listed on IDEAS

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    Cited by:

    1. Samuel Tabot Enow, 2022. "Modelling Stock Market Prices Using the Open, High and Closes Prices. Evidence from International Financial Markets," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 15(3), pages 52-59, December.
    2. Samuel Tabot Enow, 2023. "Investigating Joint Market Hypothesis during Periods of Financial Distress and its Implications," International Journal of Economics and Financial Issues, Econjournals, vol. 13(2), pages 46-50, March.
    3. Samuel Tabot ENOW, 2023. "A Non-linear Dependency Test for Market Efficiency: Evidence from International Stock Markets," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 7(1), pages 1-12.
    4. Samuel Tabot ENOW, 2022. "Evidence of Adaptive Market Hypothesis in International Financial Markets," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 13(2), pages 48-55, December.

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