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Covid-19 impact on Latin and Asian stock markets

Ines Abdelkafi (University of Sfax, ESC, URAMEF, Sfax, Tunisia)
Youssra Ben Romdhane (University of Sfax, FSEG, LED, Sfax, Tunisia)
Sahar Loukil (University of Sfax, FSEG, ARTIGE, Sfax, Tunisia)
Fatma Zaarour (University of Sousse, Sousse, Tunisia)

Managerial Finance

ISSN: 0307-4358

Article publication date: 30 August 2022

Issue publication date: 2 January 2023

137

Abstract

Purpose

The purpose of this paper is to investigate the dynamic relationship between 19 pandemic and government actions, such as governmental response index and economic support packages.

Design/methodology/approach

The authors use a panel dataset of 10 American and Latin countries for the period spanning from January 2020 to April 2021 to analyze the effect of government actions on stock market returns. The authors provide robust test results that improve the understanding of the impact of the pandemic on stock market indices through the break-up structure method and the new measure of Covid-19 extracted from Narayan et al. (2021) study.

Findings

Empirical results show the harmful effect of the corona virus on stock prices, hence the risk adverse behavior of investors. On the other hand, the quantitative approach reveals that the positive impact of government actions is degraded during Covid-19.

Originality/value

This article highlight that government actions may be effective in reducing new infections but could generate perverse economic impact through increasing uncertainty. The authors conclude that the adjustment of macroeconomic factors and the integration of financial news improve the forecasting performance of the model based on health news.

Keywords

Citation

Abdelkafi, I., Ben Romdhane, Y., Loukil, S. and Zaarour, F. (2023), "Covid-19 impact on Latin and Asian stock markets", Managerial Finance, Vol. 49 No. 1, pp. 29-45. https://doi.org/10.1108/MF-02-2022-0065

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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