The impact of the COVID-19 lockdown on stock market performance: evidence from Vietnam

Abstract

Purpose

This study explores the effects of the COVID-19 outbreak and its following lockdown on daily stock returns in Vietnam, a fast-growing emerging market that successfully revived after the pandemic lockdown.

Design/methodology/approach

This study uses panel-data regression models to evaluate the influence of the daily increase in the number of COVID-19 confirmed cases during pre-lockdown and lockdown on daily stock returns of 723 listed firms in Vietnam from 30 January to 30 May 2020.

Findings

The study confirms the adverse impact of the daily increasing number of COVID-19 cases on stock returns in Vietnam. The study also discloses that the Vietnam stock market before and during the nationwide lockdown performed in opposing ways. Though COVID-19 pre-lockdown had a significant, negative impact on Vietnam's stock returns, the lockdown period had a significant, positive influence on stock performance of the entire market and the different business sectors in Vietnam. The financial sector was hardest hit on the Vietnam stock market during the COVID-19 outbreak.

Research limitations/implications

The study indicates investors' confidence and trust in the Vietnam government's decisions to combat COVID-19 and favorable stocks prices were the main reasons that the Vietnam stock market rebounded during and after lockdown.

Originality/value

This is the first study to examine the impact of COVID-19 during the pre-lockdown and lockdown periods on stock performance in Vietnam, a rapidly developing economy that was successful in controlling the pandemic with a rejuvenated stock market after lockdown.

Citation

Anh, D.L.T. and Gan, C. (2021), "The impact of the COVID-19 lockdown on stock market performance: evidence from Vietnam", Journal of Economic Studies, Vol. 48 No. 4, pp. 836-851. https://doi.org/10.1108/JES-06-2020-0312