Country Responses and the Reaction of the Stock Market to COVID-19—a Preliminary Exposition

By D. Phan, Paresh Kumar Narayan. Emerging markets finance & trade, 2020

604 citations recorded by the source corpus.

ABSTRACT As the coronavirus pandemic (COVID-19) has amplified so has country responses to it. With COVID-19 taking its toll on humans, as reflected in the number of people infected by, and deaths from, COVID-19, countries responded by locking down economic activity and peoples movement, imposing travel bans, and implementing stimulus packages to cushion the unprecedented slowdown in economic activity and loss of jobs. This article provides a commentary on how the most active financial indicator – namely, the stock price – reacted in real-time to different stages in COVID-19’s evolution. We argue that, as with any unexpected news, markets over-react and as more information becomes available and people understand the ramifications more broadly the market corrects itself. This is our hypothesis which needs robust empirical verification.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/a3c470ed482d819df4cc9a5aab2c59ee874d9e27

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Citations in the corpus

COVID-19 lockdowns, stimulus packages, travel bans, and stock returns (2020, neutral): “This is an important issue to understand because as much as COVID-19 has been an unprecedented event, its scale has been matched by government policies to cushion its negative repercussions (Phan and Narayan, 2020).”
Has COVID-19 Changed Exchange Rate Resistance to Shocks? (2020, background): “The COVID-19 pandemic represents the largest global shock (Phan & Narayan, 2020).”
A Note on the Asian Market Volatility During the COVID-19 Pandemic (2020, background): “According to Sha & Sharma (2020) and Phan & Narayan (2020), the COVID-19 pandemic represents the largest and most disturbing shock to the global economic system and it is therefore important to understand whether the country level volatility can be determined by the regional level stock market…”
The Impact of the COVID-19 Pandemic on Firm Performance (2020, background): “Country responses and the reaction of the stock market to COVID-19 are previously discussed (Liu, Wang, and Lee 2020; Narayan and Phan 2020).”
The nexus between COVID-19 fear and stock market volatility (2021, neutral): “Many disputed the labour, whereas industries such as tourism, education, and transport completely shut down (Chandio et al., 2020; Quigley et al., 2020).”
To what extent does COVID-19 drive stock market volatility? A comparison between the U.S. and China (2021, background): “Phan and Narayan (2020) argued that COVID-19, as a form of unexpected news, could lead to market over-reactions and with the availability of more information, people would better understand the ramifications and the market would correct itself.”
Pandemics and the Asia-Pacific Islamic Stocks (2020, background): “The study’s motivation has roots in the extant literature, which suggests a strong connection between the COVID-19 pandemic and conventional stocks (see, for example, Al-Awadhi et al., 2020; He et al., 2020; Phan & Narayan, 2020; Salisu & Akanni, 2020).”
COVID-19 and the Oil Price – Stock Market Nexus: Evidence From Net Oil-Importing Countries (2020, result): “…contribution to this literature is that we add to Other recent studies related to COVID-19 and its impact on various economic factors include Chen et al. (2020), He et al. (2020), Iyke (2020b), D. Liu et al. (2020), Phan & Narayan (2020), Salisu & Akanni (2020), and Yue et al. (2020), among others.”
Economic Policy Uncertainty in Times of COVID-19 Pandemic (2020, background): “Our finding of a pandemic-induced economic uncertainty in China and Korea echoes the observations that the unprecedented nature of the COVID-19 outbreak spearheaded equally unprecedented policy responses (Iyke, 2020b; Phan & Narayan, 2020), whose paths and impacts are uncertain (Altig et al., 2020).”
Structural Breaks in Interactive Effects Panels and the Stock Market Reaction to COVID-19 (2021, background): “11We also note that our estimated breakpoint does not coincide with the sample splits considered by Capelle-Blancard and Desroziers (2020), Mamaysky (2020), and Ramelli and Wagner (2020).”
Implications of COVID-19 Pandemic on the Global Trade Networks (2020, background): “…recent studies on the impact of the COVID-19 pandemic have mostly focussed on financial markets (Ali, Alam, and Rizvi 2020; Apergis and Apergis 2020; Fu and Shen 2020; Gil-Alana and Monge 2020; Haroon and Rizvi 2020; Liu et al., 2020; Narayan 2020; Phan and Narayan 2020; Qin, Zhang., and Su 2020).”