Daily data on stock market indices, exchange rates, oil price shocks, and infection rate were obtained for the period Ma1įor 26 emerging stock markets listed by Morgan Stanley Capital International (MSCI). Where the time period is denoted by the subscript t (t=1,….,T) countries are denoted by the subscript i (i=1,….,N) α 0 represents constant term and ε it is the random error term. The remainder of this study is as follows: Section 2 presents data, methodology and empirical findings. ![]() The goal of this study is therefore to empirically investigate the impact of COVID-19 on emerging stock markets. In addition, the increasing number of countries brought spread of virus under control by mid-April might lead to an ambiguity as to what effect the pandemic has on emerging stock markets. ![]() By late March, however, governments and central banks have adopted a wide range of economic policies (see, for example: Elgin et al., 2020 Nicola et al., 2020 Carlsson-Szlezak et al., 2020 among others) in order to slow down the impact of the lockdown and the sparking fear caused by the pandemic.ĭespite of the well-anticipated effects until March 23, we still do not know much about how COVID-19 empirically affects emerging stock markets after the measures taken. In addition, recent studies indicate that the risk level of all countries increased dramatically in March when COVID-19 spread to more than 200 destinations ( Gormsen and Koijen, 2020 Zhang et al., 2020). Ramelli and Wagner (2020) assert three phases starting from early January to late March, which ended just before the Federal Reserve's “whatever it takes” announcement. Given the slowest pace of economic growth and lack of capital inflows, emerging markets have relatively limited resources to cope with the impacts of the pandemic and therefore are expected to suffer worst.Īlthough the overall economic impacts are not yet straight, financial markets have already reacted to COVID-19 by early March. Among these channels, one of the most important components is definitely the stock markets (see, for example: Ahmar and del Val, 2020 Al-Awadhi et al., 2020 among others). The pandemic can trigger a number of channels, including for example, labor markets, global supply chains, consumption behaviors, all of which can affect global economy. Given the widespread and ongoing transmission of the novel coronavirus worldwide, the WHO officially declared a pandemic on March 11, 2020. According to the World Health Organization ( WHO, 2020), the coronavirus (COVID-19) outbreak which emerged from central China in late December has spread to 216 countries, areas or territories, and has resulted in over 8.3 million confirmed cases as well as over 450000 deaths across the globe as of June 19, 2020.
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