Stock Markets during COVID-19
31 Pages Posted: 22 Jun 2022
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: Suggested Citation