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How does Covid-19 affect global equity markets?

Author

Listed:
  • Eddie C. M. Hui

    (The Hong Kong Polytechnic University)

  • Ka Kwan Kevin Chan

    (The Hong Kong Polytechnic University)

Abstract

This study applies OLS, panel regression and Granger causality test to investigate the impact of the Coronavirus disease 2019 (Covid-19) outbreak on the global equity markets during the early stage of the pandemic. We find that the Covid-19 outbreak has a significant negative impact on the overall equity index return of the eight economies even at 0.1% significance level. Furthermore, the pandemic has a more significant impact on the European countries than on the East Asian economies. The results have three main implications. Firstly, policy makers should react fast to mitigate the impact of a crisis. Secondly, investors should be aware of an outbreak of disease or other risks and adjust their investments accordingly. Furthermore, the Covid-19 outbreak results in a shift of power from the west to the east.

Suggested Citation

  • Eddie C. M. Hui & Ka Kwan Kevin Chan, 2022. "How does Covid-19 affect global equity markets?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-19, December.
    • Handle: RePEc:spr:fininn:v:8:y:2022:i:1:d:10.1186_s40854-021-00330-5
    DOI: 10.1186/s40854-021-00330-5
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    References listed on IDEAS

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