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Comparative Analysis Of Hungarian And Romanian Stock Market Indices In Context Of Covid-19

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  • KULCSÁR Edina

    (Partium Christian University, Faculty of Economics and Social Science, Department of Economics, Oradea, Romania)

Abstract

The coronavirus pandemic, erupted in 2019, re-emphasized the importance of dealing with risk and uncertainty. In addition to difficulties caused in public and health sectors, the negative consequences of COVID-19 outbreak are more and more obvious also in economy. The rapidly spread of virus from China to Europe and U.S., seriously tests the countries’ ability to deal with such an unexpected situations, both health-wise and economically. As the same time, measures adopted by governments like travel restrictions have further amplify the difficulties in some aspects. In response to growing uncertainty, individuals have suddenly changed their consumer behaviour, manifested in excessive food purchases which caused certain food products shortage. Companies have restrained production and spending. Some categories of services are particularly affected, restaurants and hotel units temporarily fully suspended their activities. There are also serious transport restrictions, airlines cancelled several flights. The news of the outbreak of the novel coronavirus, the rapid spread worldwide, and the measures taken by governments, the panic reactions of individuals and companies, negatively impact the economic and financial stability. The negative effects caused by the coronavirus affect relatively quickly the financial markets, which show terrible volatilities. On March 18, 2020, the stock market prices declined more than 30% compared to the peak price value of recent years, which can be considered significant. Since the outbreak of the coronavirus pandemic, several articles deals with the impact of virus-induced uncertainty on volatility. The results related studies highlights the correlation between COVID-19 cases, deaths and different stock indices price volatility. Based on these, the aim of this article is to examine the relationship between the main stock indices, namely BUX and BET of two neighbouring countries in Central and Eastern Europe (Romania and Hungary) and the COVID-19 cases in European Union. In order to investigate this relationship we used simple linear regression. The results show that in both countries’ stock indices case there is medium-strong correlation between BUX (R=0,6651), BET (R=0,6001) and COVID-19 European Union’s cases. By investigation of stock indices changes in the analysed period we can conclude that the time of reaction of stock markets and the intensity of stock prices changes is quite different in case of BUX (36,27%) and BET (31,12%).

Suggested Citation

  • KULCSÁR Edina, 2020. "Comparative Analysis Of Hungarian And Romanian Stock Market Indices In Context Of Covid-19," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 252-263, July.
    • Handle: RePEc:ora:journl:v:1:y:2020:i:1:p:252-263
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    References listed on IDEAS

    as
    1. Scott R. Baker & Nicholas Bloom & Steven J. Davis & Stephen J. Terry, 2020. "COVID-Induced Economic Uncertainty," NBER Working Papers 26983, National Bureau of Economic Research, Inc.
    2. Niels Joachim Gormsen & Ralph S J Koijen & Nikolai Roussanov, 0. "Coronavirus: Impact on Stock Prices and Growth Expectations," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 10(4), pages 574-597.
    3. Claudiu Albulescu, 2020. "Coronavirus and financial volatility: 40 days of fasting and fear," Papers 2003.04005, arXiv.org.
    4. Scott R. Baker & Nicholas Bloom & Steven J. Davis & Kyle J. Kost & Marco C. Sammon & Tasaneeya Viratyosin, 2020. "The Unprecedented Stock Market Impact of COVID-19," NBER Working Papers 26945, National Bureau of Economic Research, Inc.
    5. repec:aei:rpaper:1008560098 is not listed on IDEAS
    6. Hartwell, Christopher A., 2018. "The impact of institutional volatility on financial volatility in transition economies," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 598-615.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    risk; uncertainty; COVID-19; pandemic; financial crisis; stock market index; volatility;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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