From Outbreak to Vaccination: An Analysis of the Commercial Property Market Reaction to COVID-19 in Malaysia

This paper examines the impact of the COVID-19 pandemic on the performance of the commercial property market in Malaysia. Differing from previous studies that focus on the first wave of COVID-19 that erupted in March 2020, we examine how the commercial property market reacted to the resurgence of COVID-19 cases and the subsequent response (lockdowns, fiscal support, and vaccination program) of the government in dealing with the threat of the COVID-19 pandemic. We find that abnormal returns of listed property companies, REITs, and hotel operators decrease following the implementation of the first nationwide lockdown. Subsequent nationwide lockdowns, however, do not exert a significant impact on abnormal returns. Moreover, we find that 1-day window abnormal returns during the first and third nationwide lockdowns increase with increases in COVID-19 cases. This suggests that investors believe in the ability of these nationwide lockdowns to slow down the spread of the COVID-19 virus. In addition, we document a positive impact of blanket loan moratorium announcements and change in vaccination rate on abnormal returns. The economic magnitude of the stock price changes in response to these announcements could be used as a reference point by policymakers and investors when faced with future pandemics of a similar scale.