IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v11y2023i2p59-d1112389.html
   My bibliography  Save this article

Reaction of US and Chinese Stock Markets to COVID-19 News

Author

Listed:
  • Hock-Ann Lee

    (Labuan Faculty of International Finance, Universiti Malaysia Sabah, Jalan Sungai Pagar, Labuan F.T. 87000, Malaysia)

  • Venus Khim-Sen Liew

    (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Kota Samarahan 94300, Sarawak, Malaysia)

  • Mohd Fahmi Ghazali

    (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, UKM Bangi 43600, Selangor, Malaysia)

  • Samina Riaz

    (Business Studies Faculty, Bahria University Karachi, Karachi 75260, Sindh, Pakistan)

Abstract

The COVID-19 outbreak slowed down global economic activities substantially, resulting in unrest in the financial markets, especially in the beginning of the pandemic outbreak. This study aims to investigate if COVID-19 caused abnormal returns in the US and the Chinese stock markets in the beginning of the pandemic outbreak. Event study methodology is adopted for this purpose. This study finds that a significant negative impact appeared immediately after the Wuhan lockdown in the Chinese markets, while the US markets were slow to pick up. The former was more severely hurt after lockdown, while the latter was more brutally affected after COVID-19 was labeled a global threat. COVID-19 also played a significant role in connecting these two stock markets. The US and China should collaborate further in combating this novel and notorious global pandemic.

Suggested Citation

  • Hock-Ann Lee & Venus Khim-Sen Liew & Mohd Fahmi Ghazali & Samina Riaz, 2023. "Reaction of US and Chinese Stock Markets to COVID-19 News," IJFS, MDPI, vol. 11(2), pages 1-13, March.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:59-:d:1112389
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/11/2/59/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/11/2/59/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Smales, L.A., 2022. "Investor attention in cryptocurrency markets," International Review of Financial Analysis, Elsevier, vol. 79(C).
    2. Robert Schweitzer, 1989. "How do stock returns react to special events?," Business Review, Federal Reserve Bank of Philadelphia, issue Jul, pages 17-29.
    3. Zhang, Dayong & Hu, Min & Ji, Qiang, 2020. "Financial markets under the global pandemic of COVID-19," Finance Research Letters, Elsevier, vol. 36(C).
    4. Goodell, John W., 2020. "COVID-19 and finance: Agendas for future research," Finance Research Letters, Elsevier, vol. 35(C).
    5. Wen, Fenghua & Tong, Xi & Ren, Xiaohang, 2022. "Gold or Bitcoin, which is the safe haven during the COVID-19 pandemic?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boubaker, Sabri & Goodell, John W. & Kumar, Satish & Sureka, Riya, 2023. "COVID-19 and finance scholarship: A systematic and bibliometric analysis," International Review of Financial Analysis, Elsevier, vol. 85(C).
    2. Noman, Abu Hanifa Md & Karim, Muhammad Mahmudul & Hassan, Mohammad Kabir & Khan, Muhammad Asif & Pervin, Sajeda, 2023. "COVID-19 pandemic and the dynamics of major investable assets: What gives shelter to investors?," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 14-30.
    3. Heyden, Kim J. & Heyden, Thomas, 2021. "Market reactions to the arrival and containment of COVID-19: An event study," Finance Research Letters, Elsevier, vol. 38(C).
    4. Mahata, Ajit & Rai, Anish & Nurujjaman, Md. & Prakash, Om, 2021. "Modeling and analysis of the effect of COVID-19 on the stock price: V and L-shape recovery," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 574(C).
    5. Al-Maadid, Alanoud & Alhazbi, Saleh & Al-Thelaya, Khaled, 2022. "Using machine learning to analyze the impact of coronavirus pandemic news on the stock markets in GCC countries," Research in International Business and Finance, Elsevier, vol. 61(C).
    6. Yousfi, Mohamed & Ben Zaied, Younes & Ben Cheikh, Nidhaleddine & Ben Lahouel, Béchir & Bouzgarrou, Houssem, 2021. "Effects of the COVID-19 pandemic on the US stock market and uncertainty: A comparative assessment between the first and second waves," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    7. Amin Jan & Mário Nuno Mata & Pia A. Albinsson & José Moleiro Martins & Rusni Bt Hassan & Pedro Neves Mata, 2021. "Alignment of Islamic Banking Sustainability Indicators with Sustainable Development Goals: Policy Recommendations for Addressing the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(5), pages 1-38, March.
    8. Jialei Jiang & Eun-Mi Park & Seong-Taek Park, 2021. "The Impact of the COVID-19 on Economic Sustainability—A Case Study of Fluctuation in Stock Prices for China and South Korea," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    9. Díaz, Violeta & Ibrushi, Denada & Zhao, Jialin, 2021. "Reconsidering systematic factors during the Covid-19 pandemic – The rising importance of ESG," Finance Research Letters, Elsevier, vol. 38(C).
    10. Ascaryan Rafinda & Timea Gal, 2022. "Covid-19 Pandemic And Its Impact On Household Financial Behavior In Indonesia," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 7(special), pages 77-85, June.
    11. Hua Song & Yudong Yang & Zheng Tao, 2020. "How different types of financial service providers support small- and medium- enterprises under the impact of COVID-19 pandemic: from the perspective of expectancy theory," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-27, December.
    12. Katarzyna Czech & Michał Wielechowski & Pavel Kotyza & Irena Benešová & Adriana Laputková, 2020. "Shaking Stability: COVID-19 Impact on the Visegrad Group Countries’ Financial Markets," Sustainability, MDPI, vol. 12(15), pages 1-19, August.
    13. Peng-Fei Dai & Xiong Xiong & Zhifeng Liu & Toan Luu Duc Huynh & Jianjun Sun, 2021. "Preventing crash in stock market: The role of economic policy uncertainty during COVID-19," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-15, December.
    14. Islam, Raisul & Volkov, Vladimir, 2020. "Calm before the storm: an early warning approach before and during the COVID-19 crisis," Working Papers 2020-09, University of Tasmania, Tasmanian School of Business and Economics.
    15. Wang, Zhixuan & Dong, Yanli & Liu, Ailan, 2022. "How does China's stock market react to supply chain disruptions from COVID-19?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    16. Ozkan, Oktay, 2021. "Impact of COVID-19 on stock market efficiency: Evidence from developed countries," Research in International Business and Finance, Elsevier, vol. 58(C).
    17. Baris Kocaarslan & Ugur Soytas, 2021. "The Asymmetric Impact of Funding Liquidity Risk on the Volatility of Stock Portfolios during the COVID-19 Crisis," Sustainability, MDPI, vol. 13(4), pages 1-12, February.
    18. Fariha Jahan & Jungmu Kim, 2023. "Does the Shield Effect of CSR Work in Crises? Evidence in Korea," Sustainability, MDPI, vol. 15(11), pages 1-18, June.
    19. Aharon, David Y. & Siev, Smadar, 2021. "COVID-19, government interventions and emerging capital markets performance," Research in International Business and Finance, Elsevier, vol. 58(C).
    20. Bacchiocchi, Andrea & Bischi, Gian Italo & Giombini, Germana, 2022. "Non-performing loans, expectations and banking stability: A dynamic model," Chaos, Solitons & Fractals, Elsevier, vol. 157(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:11:y:2023:i:2:p:59-:d:1112389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.