World and National Stock Market Reactions to COVID-19


  • Anya Khanthavit


event study, infectious disease, return behavior


COVID-19—the world’s most recent pandemic, has caused economic and financial crises globally. The situation is continually evolving overtime in a series of events, and stock markets must respond immediately to these evolving events with updates of expected cash flows and the real and perceived risks. This study asks how and how early the world and national markets react, and to which event or events in the series. Using the event-study method, based on returns on the world, French, German, Italian, Spanish, U.K., U.S., Chinese, Philippine, and Thai stocks, the study found significant, negative reactions to the disease. The reactions were to COVID-19’s extensive media coverage and pandemic declaration, not to the evolving events and situations when they actually occur.