Stock Markets during COVID-19

31 Pages Posted: 22 Jun 2022

See all articles by Vu Le Tran

Vu Le Tran

Gjensidige Pensjonsforsikring AS; Nord University

Sjur Westgaard

Norwegian University of Science and Technology (NTNU) - Department of Industrial Economics and Technology

Maria Lavrutich

Norwegian University of Science and Technology

Date Written: May 11, 2022

Abstract

This paper reviews the literature that addresses the stock pricing implications of COVID-19 outbreak. Stock prices dropped substantially in March 2020 as a reaction to the onset of the COVID-19 pandemic; however, they recovered quickly from April/May 2020. Markets only incorporated the pandemic risk from late February 2020. During the crisis period, both the discount rate and expectation of growth were the most important (but not the only) reasons for the movement of stock prices. The Fed interventions also helped markets to recover one-third of their lost returns during COVID-19. Finally, investors’ preferences and capital shifted to more ESG-friendly firms both during and after the crisis, implying that ESG firms performed well during the time of COVID-19.

Keywords: COVID-19, Asset Pricing, Stock Markets, Investment, ESG, Monetary Policy

JEL Classification: G01, G1, G11, E44

Suggested Citation

Tran, Vu Le and Westgaard, Sjur and Lavrutich, Maria, Stock Markets during COVID-19 (May 11, 2022). Available at SSRN: https://ssrn.com/abstract=4142626

Vu Le Tran (Contact Author)

Gjensidige Pensjonsforsikring AS ( email )

Schweigaards gate 14
Oslo, 0185
Norway

Nord University ( email )

Universitetsalléen 11
8049 Bodo
Norway

Sjur Westgaard

Norwegian University of Science and Technology (NTNU) - Department of Industrial Economics and Technology ( email )

NO-7491 Trondheim
Norway

Maria Lavrutich

Norwegian University of Science and Technology ( email )

NO-7491 Trondheim
Norway

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