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COVID-19 AND STOCK RETURNS: EVIDENCE FROM MALAYSIA
- Source :
- International Journal of Banking and Finance, Vol 16, Iss 2, Pp 111-140 (2021)
- Publication Year :
- 2021
- Publisher :
- Universiti Utara Malaysia, 2021.
-
Abstract
- The severe acute respiratory syndrome (SARS) coronavirus or Covid-19 has affected the world unprecedentedly. Malaysia is not exempted from its impact. The Malaysian government announced a nationwide lockdown in the middle of March 2020. The magnitude of the outbreak had caused panic to the public and financial panic in the stock market. This study examined the impact of Covid-19 cases and the action taken by the government through movement control orders (MCOs) and economic stimulus packages in the stock market. Event study methodology was used to assess the impact of Covid-19 on stock returns in Bursa Malaysia. Consistent with the efficient market hypothesis, the study found that during the early stages of the MCOs, the cumulative average abnormal returns (CAAR) reflected significant negative returns. However, it showed positive returns after MCO 3 and MCO 4. The results implied that the market perceived that the pandemic was under control. The study also revealed a significant relationship between CAAR and the number of cases announced, supporting the notion that in a less to a moderately free country such as Malaysia, investors showed a certain lack of trust in the number of cases reported by the authorities, and thus overreacted to the number of reported cases. The stimulus packages that were expected to stabilise the economy and society were found to be positively significant during the early stages of the MCOs.
- Subjects :
- efficient market hypothesis
Stimulus (economics)
Coronavirus disease 2019 (COVID-19)
Control (management)
Efficient-market hypothesis
0502 economics and business
medicine
Stock (geology)
event study
040101 forestry
Government
050208 finance
pandemic
05 social sciences
Panic
04 agricultural and veterinary sciences
malaysia
Psychiatry and Mental health
Neuropsychology and Physiological Psychology
covid-19
HG1-9999
0401 agriculture, forestry, and fisheries
Stock market
Demographic economics
Business
medicine.symptom
Finance
Subjects
Details
- Language :
- English
- Volume :
- 16
- Issue :
- 2
- Database :
- OpenAIRE
- Journal :
- International Journal of Banking and Finance
- Accession number :
- edsair.doi.dedup.....bcfa6bc1c1deabfed0002f846b6d5f35