Did all Emerging Equity Markets get Equally Affected by Covid-19? Role of Market Characteristics, Economic Conditions, and Government Policies

The Covid-19 pandemic wreaked havoc on global economies. Emerging markets were hit particularly harder during the Covid19 pandemic due to their reliance on exports, tourism, and weaker fiscal policies. This paper aims to analyze the performance of the equity markets of 22 developing countries based on their average firm-related characteristics, macroeconomic conditions, and freedom variables during the early outbreak of Covid-19. Our results show that leverage, the fiscal health of the country, and financial freedom were the most important variables for emerging market countries as they provided resilience during the Pandemic. These findings have clear policy implications and are important for the sustainability of emerging stock markets. © 2022, AfricaGrowth Institute. All rights reserved.

Are investors’ attention and uncertainty aversion the risk factors for stock markets? International evidence from the covid-19 crisis

In this paper, we examine the impact of investors’ attention to COVID-19 on stock market returns and the moderating effect of national culture on this relationship. Using daily data from 34 countries over the period 23 January to 12 June 2020, and measuring investors’ attention with the Google search volume (GSV) of the word “coronavirus” for each country, we find that investors’ enhanced attention to the COVID-19 pandemic results in negative stock market returns. Further, measuring the national culture with the uncertainty avoidance index (the aspect of national culture which measures the cross-country differences in decision-making under stress and ambiguity), we find that the negative impact of investors’ attention on stock market returns is stronger in countries where investors possess higher uncertainty avoidance cultural values. Our findings imply that uncertainty avoidance cultural values of investors promote financial market instability amid the crisis. © 2020 by the authors. Li-censee MDPI, Basel, Switzerland.