A Study on the Impact of COVID-19 on the Stock Market in BRIC Countries

Abstract

The COVID-19 pandemic has recently had an impact on the stock market all over the globe. A thorough review of the literature that included the most cited articles and articles from well-known databases revealed that earlier research in the field had not specifically addressed how the BRIC stock markets responded to the COVID-19 pandemic. The data regarding COVID-19 were collected from the World Health Organization (WHO) website, and the stock market data were collected from Yahoo Finance and the respective country’s stock exchange. A random forest regression algorithm takes the closing price of respective stock indices as target variables and COVID-19 variables as input variables. Using this algorithm, a model is fit to the data and is visualised using line plots. This study’s findings highlight a relationship between the COVID-19 variables and stock market indices. In addition, the stock market of BRIC countries showed a high correlation, especially with the Shanghai Composite Stock Index with a correlation value of 0.7 and above. Brazil took the worst hit in the studied duration by declining approximately 45.99%, followed by India by 37.76%. Finally, the data set’s model fit, which employed the random forest machine learning method, produced R² values of 0.972, 0.005, 0.997, and 0.983 and mean percentage errors of 1.4, 0.8, 0.9, and 0.8 for Brazil, Russia, India, and China (BRIC), respectively. Even now, two years after the coronavirus pandemic started, the Brazilian stock index has not yet returned to its pre-pandemic level.

Citation

Raja, M.A.S., Shekar, K., Harshith, B. and Rastogi, P. (2023), "A Study on the Impact of COVID-19 on the Stock Market in BRIC Countries", Sood, K., Balusamy, B. and Grima, S. (Ed.) Digital Transformation, Strategic Resilience, Cyber Security and Risk Management (Contemporary Studies in Economic and Financial Analysis, Vol. 111C), Emerald Publishing Limited, Leeds, pp. 1-26. https://doi.org/10.1108/S1569-37592023000111C001