Fear of the coronavirus and the stock markets

Lyócsa, Štefan; Baumöhl, Eduard; Výrost, Tomáš; Molnár, Péter

doi:10.1016/j.frl.2020.101735

Cited by 176 publications

(153 citation statements)

References 36 publications

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“…The increasing number of new cases and deaths related to COVID-19 has created a palpable fear and uncertainty among market participants, e.g., investors and analysts. A growing stream of literature analyzes the impact of the fear of infection and death related to the COVID-19 pandemic on global stock market performance, for example, fear and global stock market performances ( Lyocsa et al, 2020 ; Salisu & Akanni, 2020 ), fear and commodity price returns ( Salisu et al, 2020 ), death, panic, and the US equity market performance ( Baig et al, 2020 ), the reactions of stock prices in the airline and tourism industry during the COVID-19 period ( Carter et al, 2020 ), and the importance of social trust on firm performance during the pandemic ( Mazumder, 2020 ), among many others. However, very few studies have analyzed the impact of fear of the pandemic on IPO underpricing and post-initial performance.…”

Section: Introductionmentioning

confidence: 99%

COVID-19: Fear of pandemic and short-term IPO performance

Mazumder

Saha

2021

Finance Research Letters

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This study analyzes the relationship between COVID-19 related fear and short-term IPO performance. Though the average market-adjusted initial return of IPOs in the year 2020 is higher than that of the last four decades, it decreases if fear of pandemic increases. The evidence is robust when we use matching firm-adjusted initial returns. Next, we analyze the persistence of performance after the IPO date. The results show that the performance of IPO firms is more sensitive to the fear of the pandemic than the performance of similar existing firms.

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Section: Introductionmentioning

confidence: 99%

COVID-19: Fear of pandemic and short-term IPO performance

Mazumder

Saha

2021

Finance Research Letters

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“…Their findings indicate that gold has been functioning as a safe haven asset during the pandemic. Lyocsa et al (2020) employed daily data over the 2 December 2019-30 April 2020 period to investigate the relationship between fear about COVID-19 and uncertainty in the U.S. S&P 500 and major stock market indices from nine other countries. They measured fear of the virus by examining Google searches for terms related to the virus and uncertainty by the daily variance of market returns.…”

Section: Introductionmentioning

confidence: 99%

The Impact of the COVID-19 Pandemic on the U.S. Economy: Evidence from the Stock Market

Thorbecke

2020

JRFM

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The coronavirus crisis has damaged the U.S. economy. This paper uses the stock returns of 125 sectors to investigate its impact. It decomposes returns into components driven by sector-specific factors and by macroeconomic factors. Idiosyncratic factors harmed industries such as airlines, aerospace, real estate, tourism, oil, brewers, retail apparel, and funerals. There are thus large swaths of the economy whose recovery depends not on the macroeconomic environment but on controlling the pandemic. Macroeconomic factors generated losses in industries such as production equipment, machinery, and electronic and electrical equipment. Thus, reviving capital goods spending requires not just an end to the pandemic but also a macroeconomic recovery.

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“…The Covid-19 pandemic, which quickly spread globally, did not initially affect the stock market. But with the rapid increase in mortality the market began to react negatively (Ashraf 2020;Khan et al 2020;Lyócsa, Baumöhl, Výrost, & Molnár 2020). The coronavirus also triggered the decline in stock market prices especially following the World Health Organization (WHO) declaration of its pandemic status which led to negative abnormal returns in the market (Alali, 2020;Liu, Manzoor, Wang, Zhang, & Manzoor 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Pandemic Attack and Islamic Stocks Index: A Cross Country Analysis

Mubarok¹,

Arif²

2021

JEM

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The impact of Covid-19 has triggered the current global economic downturn affecting all aspects of the economy including the Islamic stock index. This study aims to determine the model for forecasting the index. The Islamic stock index is used in six countries through adopting the Autoregressive Conditional Heteroscedasticity -Generalized Autoregressive Conditional Heteroscedasticity (ARCH-GARCH) method on daily data over the period January 2020 to October 2020. The risk level of each index was found to be influenced by the residual value from the previous day. The forecasting revealed the tendency of all stock prices to decline. These are associated with impacts of the Covid-19 pandemic on current and future economic performance. Investors need to assess the sector's fundamentals and the individual stocks in question, that are potential winners with propensity to recover and grow well once the market rebounds. They also need to continuously track the development of the pandemic in tandem with the economic sector and thus make the necessary adjustments at every step of the investment process.

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Fear of the coronavirus and the stock markets

Cited by 176 publications

References 36 publications

COVID-19: Fear of pandemic and short-term IPO performance

COVID-19: Fear of pandemic and short-term IPO performance

The Impact of the COVID-19 Pandemic on the U.S. Economy: Evidence from the Stock Market

Pandemic Attack and Islamic Stocks Index: A Cross Country Analysis

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