Stock markets' responses to COVID-19 in developing countries: evidence from the SAARC region

2021 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
S.K. Mishra ◽  
P.K. Mishra
Keyword(s):  
Developing Countries ◽  
Stock Markets

scholarly journals Stock Prices and Exchange Rates: Are they Related? Evidence from South Asian Countries

2002 ◽  
Vol 41 (4II) ◽  
pp. 535-550 ◽  
Author(s):  
Naeem Muhammad ◽  
Abdul Rasheed
Keyword(s):  
Developing Countries ◽  
Exchange Rates ◽  
Stock Prices ◽  
Stock Markets ◽  
Negative Relationship ◽  
Developed Countries ◽  
Empirical Literature ◽  
Economic Policies ◽  
Foreign Portfolio Investment ◽  
The Developed Countries

The issue of whether stock prices and exchange rates are related or not has received considerable attention after the East Asian crisis. During the crisis the countries affected saw turmoil in both currency and stock markets. If stock prices and exchange rates are related and the causation runs from exchange rates to stock prices, then the crisis in the stock markets can be prevented by controlling the exchange rates. Moreover, developing countries can exploit such a link to attract/stimulate foreign portfolio investment in their own countries. Similarly, if the causation runs from stock prices to exchange rates then authorities can focus on domestic economic policies to stabilise the stock market. If the two markets/prices are related then investors can use this information to predict the behaviour of one market using the information on other market.1 Most of the empirical literature that has examined the stock prices-exchange rate relationship has focused on examining this relationship for the developed countries with very little attention on the developing countries. The results of these studies are, however, inconclusive. Some studies have found a significant positive relationship between stock prices and exchange rates [for instance Smith (1992); Solnik (1987) and Aggarwal (1981)] while others have reported a significant negative relationship between the two [e.g., Soenen and Hennigar (1998)]. On the other hand, there are some studies that have found very weak or no association between stock prices and exchange rates [for instance, Franck and Young (1972); Bartov and Bodnor (1994)].

Examining investors' sentiments, behavioral biases and investment decisions during COVID-19 in the emerging stock market: a case of Pakistan stock market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shagufta Parveen ◽  
Zoya Wajid Satti ◽  
Qazi Abdul Subhan ◽  
Nishat Riaz ◽  
Samreen Fahim Baber ◽  
...  
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Behavioral Finance ◽  
Stock Markets ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Disposition Effect ◽  
Content Type ◽  
Behavioral Biases ◽  
The Impact

PurposeThis study investigates the impact of the COVID-19 pandemic on investors' sentiments, behavioral biases and investment decisions in the Pakistan Stock Exchange (PSX).Design/methodology/approachThe authors have assessed investors' behaviors and sentiments and the stock market overreaction during COVID-19 using a questionnaire and collected data from 401 investors trading in the PSX.FindingsResults of structural equation modeling revealed that the COVID-19 pandemic affected investors' behaviors, investment decisions and trade volume. It created feelings of fear and uncertainty among market participants. Evidence suggests that behavioral heuristics and biases, including representative heuristic, anchoring heuristic, overconfidence bias and disposition effect, negatively influenced investors' decisions at the PSX.Research limitations/implicationsThis study will contribute to behavioral finance literature in the context of developing countries as it has revealed the impact of COVID-19 on the emerging stock market, and its results are generalizable to other emerging stock markets.Practical implicationsThe findings of this study will help academicians, researchers and policymakers of developing countries. Academicians can formulate new behavioral models that can depict the solutions of dealing with an uncertain situation like COVID-19. Policymakers like the Securities Exchange Commission and the PSX can formulate crisis management strategies based on behavioral finance concepts to cope with situations like COVID-19 in the future and help lessen investors' losses in the stock markets. The role of the Securities Exchange Commission is crucial as it regulates the financial markets. It can arrange workshops to educate investors to manage their decisions during crisis time and focus on the best use of irrational and rational decision-making at the same time using Lo (2004) adaptive market hypothesis.Originality/valueThe novelty of the paper is that the authors have introduced overconfidence and disposition effect as mediators that create a connection between representative and anchoring heuristics and investment decisions using primary data collected from investors (institutional and retail) to demonstrate the presence of psychological biases during COVID-19, and it has been done for the first time according to authors' knowledge. It is a contribution and addition to the behavioral finance literature in the context of developing countries' stock markets and their efficiency.

scholarly journals Methodological Foundations of the Risk of the Stock Markets of Developed and Developing Countries in the Conditions of the Crisis

2021 ◽  
Vol 15 (1) ◽  
pp. 3
Author(s):  
Diana Burkaltseva ◽  
Shakizada Niyazbekova ◽  
Lyudmila Borsch ◽  
Mir Abdul Kayum Jallal ◽  
Nataliya Apatova ◽  
...  
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Stock Market ◽  
Stock Markets ◽  
Regulatory System ◽  
Digital Technologies ◽  
The State ◽  
Stock Exchanges ◽  
Real Sector ◽  
The Real

The development of a methodology for the growth of the stock market through a deep transformation of the economic development system and introduction of digital technologies. The article is devoted to the study of the development of stock markets’ actual problems that affect the redistribution of capital between sectors of the economy by using tools and mechanisms between the financial and stock markets. The purpose of the study is to improve the regulatory segment of the stock market in order to further develop stock exchanges, integrate them into the global economic system, and attract investment in the economy. To achieve the goal, the following tasks were performed: the development of the London Stock Exchange was analyzed and the profit growth was determined; a comparative capitalization of the main stock instruments was carried out; internal factors of influence on the stock market were determined. The problem of the international stock market in all countries with emerging markets, first of all, lies in the improvement of the institutional environment, which is a prerequisite for the stability of the stock market. To analyze the development of stock markets, natural technical sciences were used to identify objective patterns, and determine the state and motives, using various methods and techniques: logic, generalizations, specific methods of cognition, comparison, and graphics. In the development of the stock market, the economy establishes certain natural actions in the real sector of the economy through a regulatory system of measures, and the needs of investments in the real sector of the economy, methods, and tools are used to achieve the desired results. Statistical, analytical, and dynamic methods were used. The essential foundations of the importance of stock markets and the economy are revealed; we discuss the penetration of knowledge and the conduction of a deep transformation through the introduction of digital technologies in all spheres of the economy, including the transformation of the development of the stock and financial markets nowadays. Results. The assessment of the state of securities markets in developed and developing countries is made on the example of the largest stock exchanges in Brazil and the United Kingdom. The features of the effective functioning of stock markets are revealed. The hypothesis is put forward about the insufficiency of research on the stock market of developed and developing countries and the mechanisms used having an insufficient impact on the development of the economy. From this point of view, an analysis of the dynamics of the current state of the issuers’ number and the dynamics of profitability of developed markets is carried out, the comparative capitalization volumes of the stock markets of Great Britain and Brazil are evaluated, and the weaknesses of their functioning are identified. Conclusions. The conducted research shows that countries, where stock markets are successfully functioning and developing, are catalysts for economic development and the accumulation of funds. Each country applies models of stock market development and a strategy for its regulation in accordance with the concept of a functioning market and its maturity.

scholarly journals The Early Impact of Government Financial Intervention Policies and Cultural Secrecy on Stock Market Returns During the COVID-19 Pandemic: Evidence From Developing Countries

2021 ◽  
Vol 12 (2) ◽  
pp. 401
Author(s):  
Fouad Jamaani ◽  
Manal Alidarous ◽  
Abdullah Al-Awadh
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Stock Markets ◽  
Equity Markets ◽  
Equity Market ◽  
Equity Returns ◽  
Market Returns ◽  
Daily Growth ◽  
Role Of Government ◽  
Stock Market Returns

This paper examines the role of government financial intervention policies and cultural secrecy on equity market returns during the start of the COVID-19 pandemic in developing countries’ stock markets. We employ global data including 939 observations across 32 developing countries (23 emerging and 9 frontier stock markets) from December 1 to April 28, 2020. Our results show that the above-mentioned policies that set out to curb the COVID-19 pandemic succeed in increasing equity returns. It reflects investors’ improved perceptions of governments’ commitment to stabilizing the economy during the pandemic in developing, emerging, and frontier equity markets. Results show that investors in all equity markets discount differences in cultural secrecy in processing market information when investing in stock markets. We find that equity market investors in developing and emerging countries truly react negatively to the rise in the number of confirmed COVID-19 cases reported. Yet, we find that COVID-19 wields no influence on equity market returns in frontier equity markets. This presents frontier equity markets as a safe-haven investment destination during a global health outbreak. Our work helps investors during such events to identify the best and worst investment destinations in developing, emerging, and frontier stock markets. At the same time, it is important to understand the critical roles of: firstly, the introduced government financial intervention policies; and secondly, the daily growth in reported COVID-19 cases on stock market returns.

Influence of Terrorist Acts on the Dynamics of World Stock Markets: Situational Analysis

2018 ◽  
Vol 2018 (1) ◽  
pp. 105-121
Author(s):  
Sergej Volodin ◽  
Andrej Mikhalev
Keyword(s):  
Developing Countries ◽  
Law Enforcement ◽  
Financial Markets ◽  
Stock Markets ◽  
Terrorist Attacks ◽  
General Nature ◽  
Situational Analysis ◽  
Law Enforcement Agencies ◽  
Terrorist Acts ◽  
The Impact

Despite the efforts of law enforcement agencies of the world’s leading countries, the influence of radical movements has become much stronger in last decades. Terrorist acts lead to a sharp destabilization in the country especially in its economy. Although the number of terrorist acts is growing, their impact on the financial markets is still barely studied. That is why the aim of this work is to define the general nature of the impact of terrorist attacks on world stock markets. For this purpose, the authors use data for nineteen countries for the period from 1988 to May 2017. The situational analysis, which is based on this data, made it possible to identify the main trends in the impact of terrorist attacks on the dynamics of market indices in developed and developing countries, and also to describe Russian specifics. The conclusions of this work can be useful to market agents as well as to the organizers of trades and regulators, for the formation of timely and correct measures to stabilize the financial system in such situations.

COVID-19 and Two different Stock Markets: An Event Study Analysis

2021 ◽  
Vol 15 (2) ◽  
Author(s):  
Fakhrul Hasan ◽  
Ahmed Shahbaz
Keyword(s):  
Developing Countries ◽  
Stock Market ◽  
Event Study ◽  
Stock Markets ◽  
Research Question ◽  
Developed Countries ◽  
Stock Market Returns ◽  
Main Research ◽  
Study Methodology ◽  
The Developed Countries

In this study, we examine two different stock markets’ response to the COVID-19 pandemic using event study methodology and a novel linear regression model. We use LSE (UK) as a proxy for the developed countries stock market and DSE (Bangladesh) as a proxy for the developing countries stock market. Using the daily COVID-19 confirmed cases and deaths and stock market returns data from these two countries (UK and Bangladesh) over the period November 01, 2020 to August 07, 2020. Our main research question was, which stock market suffered more during the COVID-19 pandemic, whether developed countries stock market or developing countries stock market. We find that developed countries stock markets (LSE as proxy) responded negatively to the growth in COVID-19 confirmed cases and deaths in COVID-19. We further find that developing countries stock markets (DSE as proxy) did not responded to the growth in COVID-19 confirmed cases and deaths in COVID-19.

Remittances, banks and stock markets: Panel evidence from developing countries

2017 ◽  
Vol 42 ◽  
pp. 1413-1427 ◽  
Author(s):  
Haruna Issahaku ◽  
Joshua Yindenaba Abor ◽  
Simon Kwadzogah Harvey
Keyword(s):  
Developing Countries ◽  
Stock Markets
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