COVID-19 Vaccines: Saving Lives and the Global Stock Markets

30 Pages Posted: 16 Feb 2021 Last revised: 12 Mar 2021

See all articles by Kam Fong Chan

Kam Fong Chan

The University of Western Australia; Financial Research Network (FIRN)

Zhuo Chen

Tsinghua University - PBC School of Finance

Yuanji Wen

The University of Western Australia - Department of Accounting and Finance

Tong Xu

Renmin University of China - School of Business

Date Written: February 14, 2021

Abstract

Global stock markets react positively when different phases of human clinical trials on COVID-19 vaccine candidates begin. The average increase in stock market returns on day one of the trials is 15.2 basis points, and this estimate is both economically and statistically significant. The market reactions also show cross-phase and cross-country variations. We use a simple capital budgeting framework to explain the finding that stock markets convey important information about market-wide expectations on vaccine development that evolve along with the pandemic.

Keywords: COVID-19, pandemics, stock markets, vaccines

JEL Classification: G10, G14, I15

Suggested Citation

Chan, Kam Fong and Chen, Zhuo and Wen, Yuanji and Xu, Tong, COVID-19 Vaccines: Saving Lives and the Global Stock Markets (February 14, 2021). Available at SSRN: https://ssrn.com/abstract=3785533 or http://dx.doi.org/10.2139/ssrn.3785533

Kam Fong Chan

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Zhuo Chen

Tsinghua University - PBC School of Finance

No. 43, Chengdu Road
Haidian District
Beijing, Beijing 100083
China

Yuanji Wen

The University of Western Australia - Department of Accounting and Finance ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Tong Xu (Contact Author)

Renmin University of China - School of Business ( email )

No. 59, Zhongguancun Street
Haidian District
Beijing, Beijing 100872
China

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