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Government responses to COVID-19 and industry stock returns

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  • Elie Bouri
  • Muhammad Abubakr Naeem
  • Safwan Mohd Nor
  • Imen Mbarki
  • Tareq Saeed

Abstract

Governments around the world have responded to the COVID-19 outbreak with a mix of policies. The strictest responses of the New Zealand government are notable, given their abilities to contain and limit the spread of the virus. However, their impacts on stock returns remain unclear. This paper investigates the impact of three policies, namely lockdown, the stimulus package, and the travel ban, on the returns of 14 New Zealand industry stock indices. Using daily data from 1 January 2019 to 25 August 2020, evidence points to a heightened level of integration among the various industry stock indices during the early stages of the pandemic. Only lockdown has had a positive impact on aggregate stock returns, suggesting its ability to raise investors’ confidence in the overall stock market. At the industry level, the impact of the three response policies is generally positive but heterogeneous across industry stock indices. Notably, none of the three adopted policies significantly impact technology, healthcare, and real estate returns.

Suggested Citation

  • Elie Bouri & Muhammad Abubakr Naeem & Safwan Mohd Nor & Imen Mbarki & Tareq Saeed, 2022. "Government responses to COVID-19 and industry stock returns," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 1967-1990, December.
    • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:1967-1990
    DOI: 10.1080/1331677X.2021.1929374
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    Cited by:

    1. Yu, Xiaoling & Xiao, Kaitian, 2023. "COVID-19 Government restriction policy, COVID-19 vaccination and stock markets: Evidence from a global perspective," Finance Research Letters, Elsevier, vol. 53(C).
    2. Chowdhury, Mohammad Ashraful Ferdous & Abdullah, Mohammad & Masih, Mansur, 2022. "COVID-19 government interventions and cryptocurrency market: Is there any optimum portfolio diversification?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    3. Shafiullah, Muhammad & Senthilkumar, Arunachalam & Lucey, Brian M. & Naeem, Muhammad Abubakr, 2024. "Deciphering asymmetric spillovers in US industries: Insights from higher-order moments," Research in International Business and Finance, Elsevier, vol. 70(PA).
    4. Naeem, Muhammad Abubakr & Ashraf, Sania & Karim, Sitara & Moussa, Faten, 2024. "Green finance under stress: Unraveling the spillover effects of tail risk," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 225-236.

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