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The Impact of the COVID-19 Pandemic on the Malaysian Stock Market

In: Contemporary Issues in Finance, Investment and Banking in Malaysia

Author

Listed:
  • Zulkefly Abdul Karim

    (Universiti Kebangsaan Malaysia)

  • Lay Qin Yi

    (Hong Leong Bank Berhad)

  • Bakri Abdul Karim

    (Universiti Malaysia Sarawak)

  • Siti Farah Dilla Zakaria

    (Tun Ismail Ali Distinguished Chair (YTI-UKM), Universiti Kebangsaan Malaysia)

Abstract

The COVID-19 pandemic has been shattering the world since the beginning of 2020 and has caused an enormous impact on the stock markets. Malaysia, a small and open economy, was equally affected by the pandemic. This is reflected in the Movement Control Order (MCO) implementation, which ceased most of the economic activities and consequently affected the Malaysian stock market. Therefore, this study aims to examine the impact of COVID-19 on the FTBM Kuala Lumpur Composite Index (KLCI) and 13 other sectoral indices using the Autoregressive Distributed Lag (ARDL) model. Using the sample period from 5 February 2020 to 31 December 2020, the main results showed that the increase in COVID-19 cases in Malaysia and globally still positively impacted the KLCI and all sectoral indices during this period. The findings of this study bring implications for investors, investment institutions, and policymakers in the following aspects. First, this study helps investors in determining strategies to manage their portfolios. This study also assists investment institutions in identifying risks in each sector during the pandemic. Finally, this study helps policymakers set policies to maintain stock market stability while facing market shocks like this pandemic. This study is relevant in increasing perspectives to help all stakeholders execute the best decisions, especially with the COVID-19 pandemic still active worldwide.

Suggested Citation

  • Zulkefly Abdul Karim & Lay Qin Yi & Bakri Abdul Karim & Siti Farah Dilla Zakaria, 2024. "The Impact of the COVID-19 Pandemic on the Malaysian Stock Market," Springer Books, in: Zulkefly Abdul Karim & Ruzita Abdul Rahim & Wai Yan Wong & Siti Farah Dilla Zakaria (ed.), Contemporary Issues in Finance, Investment and Banking in Malaysia, pages 65-79, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-5447-6_5
    DOI: 10.1007/978-981-99-5447-6_5
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