The COVID-19 Outbreak and Affected Countries Stock Markets Response

• Published in: International journal of environmental research and public health Vol. 17; no. 8; p. 2800
• Main Authors: Liu, HaiYue, Manzoor, Aqsa, Wang, CangYu, Zhang, Lei, Manzoor, Zaira
• Format: Journal Article
• Language: English
• Published: Switzerland MDPI AG 18-04-2020; MDPI
• Subjects: Betacoronavirus; Commerce - economics; Coronavirus Infections - economics; Coronavirus Infections - epidemiology; Coronaviruses; COVID-19; Disease Outbreaks - economics; Epidemics; Humans; Infectious diseases; Investments - economics; Outbreaks; Pandemics - economics; Pneumonia, Viral - economics; Pneumonia, Viral - epidemiology; SARS-CoV-2; Stock exchanges; Uncertainty; Viruses; Zika virus; Vietnam; Singapore; Asia; United States > US; China; Brazil; Hong Kong China; Malaysia; Thailand; Indonesia; COVID-19; stock market indices; investor sentiment; abnormal returns
• ISSN: 1660-4601; 1661-7827; 1660-4601
• DOI: 10.3390/ijerph17082800

This paper evaluates the short-term impact of the coronavirus outbreak on 21 leading stock market indices in major affected countries including Japan, Korea, Singapore, the USA, Germany, Italy, and the UK etc. The consequences of infectious disease are considerable and have been directly affecting stock markets worldwide. Using an event study method, our results indicate that the stock markets in major affected countries and areas fell quickly after the virus outbreak. Countries in Asia experienced more negative abnormal returns as compared to other countries. Further panel fixed effect regressions also support the adverse effect of COVID-19 confirmed cases on stock indices abnormal returns through an effective channel by adding up investors' pessimistic sentiment on future returns and fears of uncertainties.