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COVID ‐19 outbreak and sectoral performance of the Australian stock market: An event study analysis

Author

Listed:
  • Md. Mahmudul Alam

    (UUM - Universiti Utara Malaysia)

  • Haitian Wei

    (UUM - Universiti Utara Malaysia)

  • Abu N M Wahid

    (Tennessee State University)

Abstract

The outbreak of COVID-19 has weakened the economy of Australia and its capital market since early 2020. The overall stock market has declined. However, some sectors become highly vulnerable while others continue to perform well even in the crisis period. Given this new reality, we seek to investigate the initial volatility and the sectoral return. In this study, we analyse data for eight sectors such as, transportation, pharmaceuticals, healthcare, energy, food, real estate, telecommunications and technology of the Australian stock market. In doing so, we obtain data from Australian Securities Exchange (ASX) and analysed them based on `Event Study' method. Here, we use the 10-days window for the event of official announcement of the COVID-19 outbreak in Australia on 27 February, 2020. The findings of the study show that on the day of announcement, the indices for food, pharmaceuticals and healthcare exhibit impressive positive returns. Following the announcement, the telecommunications, pharmaceuticals and healthcare sectors exhibit good performance, while poor performance is demonstrated by the transportation industry. The findings are vital for investors, market participants, companies, private and public policymakers and governments to develop recovery action plans for vulnerable sectors and enable investors to regain their confidence to make better investment decisions.

Suggested Citation

  • Md. Mahmudul Alam & Haitian Wei & Abu N M Wahid, 2021. "COVID ‐19 outbreak and sectoral performance of the Australian stock market: An event study analysis," Post-Print hal-03538183, HAL.
    • Handle: RePEc:hal:journl:hal-03538183
    DOI: 10.1111/1467-8454.12215
    Note: View the original document on HAL open archive server: https://hal.science/hal-03538183
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    2. Srbinoski Bojan & Meceski Stevco & Joldeska Irina, 2022. "Market Reactions to Government Support Packages During the Pandemic in North Macedonia," Economic Themes, Sciendo, vol. 60(4), pages 429-440, December.
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    6. ATM Adnan & Sameer Al Johani, 2023. "Stock Market Reaction to COVID-19: A Cross-Sectional Industry Analysis in Frontier Market," IIM Kozhikode Society & Management Review, , vol. 12(2), pages 157-181, July.
    7. Daniel Stefan Armeanu & Stefan Cristian Gherghina & Jean Vasile Andrei & Camelia Catalina Joldes, 2022. "Modeling the impact of the COVID‐19 outbreak on environment, health sector and energy market," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 1387-1416, October.
    8. Mbongiseni Ncube & Mabutho Sibanda & Frank Ranganai Matenda, 2023. "COVID-19 Pandemic and Stock Performance: Evidence from the Sub-Saharan African Stock Markets," Economies, MDPI, vol. 11(3), pages 1-21, March.
    9. Asafo-Adjei, Emmanuel & Tiwari, Aviral Kumar & Abakah, Emmanuel Joel Aikins & Lee, Chi-Chuan, 2024. "Risk synchronization in Australia stock market: A sector analysis," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 582-610.
    10. Raza, Syed Ali & Shah, Nida & Suleman, Muhammed Tahir, 2024. "A multifractal detrended fluctuation analysis of Islamic and conventional financial markets efficiency during the COVID-19 pandemic," International Economics, Elsevier, vol. 177(C).
    11. Woei Chyuan Wong & Edie Erman Che Johari & Shazida Jan Mohd Khan & Siti Nurazira Mohd Daud & Mohd Yushairi Mat Yusoff & Hafirda Akma Musaddad, 2023. "From Outbreak to Vaccination: An Analysis of the Commercial Property Market Reaction to COVID-19 in Malaysia," International Real Estate Review, Global Social Science Institute, vol. 26(3), pages 267-298.
    12. Adeel Nasir & Ștefan Cristian Gherghina & Mário Nuno Mata & Kanwal Iqbal Khan & Pedro Neves Mata & Joaquim António Ferrão, 2022. "Testing Stock Market Efficiency from Spillover Effect of Panama Leaks," JRFM, MDPI, vol. 15(2), pages 1-23, February.
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    More about this item

    Keywords

    COVID-19; Coronavirus; Event study; Abnormal returns; Stock indices; Australian Securities Exchange (ASX);
    All these keywords.

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