Stock market reaction to the Coronavirus pandemic

Abstract

The study investigates response of stock market to the coronavirus pandemic. The economic consequences of the coronavirus (COVID-19) for stock market are considerable for a developing country, like Pakistan, which is amongst the list of fifteen countries with the highest number of coronavirus cases at present. The present study is aimed at finding the effect of an increase in number of confirmed cases of coronavirus on the stock returns in Pakistan stock market. Additionally, the study investigates the effect of increase in number of deaths on the stock returns. The results show that an increase in the number of confirmed cases have a significant negative effect on the stock returns. While the increase in number of deaths do not have a significant effect on the stock returns. The results are in line with the results of Ashraf (2020). The finding are important for the policymakers in formulating policies in safeguarding the investors in the stock market during this uncertain time.