COVID‐19 outbreak and sectoral performance of the Australian stock market: An event study analysis

The outbreak of COVID‐19 has weakened the economy of Australia and its capital market since early 2020. The overall stock market has declined. However, some sectors become highly vulnerable while others continue to perform well even in the crisis period. Given this new reality, we seek to investigat...

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Bibliographic Details
Published in:Australian Economic Papers 2021-09, Vol.60 (3), p.482-495
Main Authors: Alam, Md. Mahmudul, Wei, Haitian, Wahid, Abu N. M.
Format: Article
Language:English
Subjects:
abnormal returns
Announcements
Australian Securities Exchange (ASX)
Capital markets
coronavirus
COVID-19
Economics and Finance
event study
Health care
Humanities and Social Sciences
Original
Pharmaceuticals
Policy making
Prescription drugs
Real estate
Securities markets
Stock exchanges
stock indices
Technology
Telecommunications
Transportation
Volatility
Vulnerability
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Summary:The outbreak of COVID‐19 has weakened the economy of Australia and its capital market since early 2020. The overall stock market has declined. However, some sectors become highly vulnerable while others continue to perform well even in the crisis period. Given this new reality, we seek to investigate the initial volatility and the sectoral return. In this study, we analyse data for eight sectors such as, transportation, pharmaceuticals, healthcare, energy, food, real estate, telecommunications and technology of the Australian stock market. In doing so, we obtain data from Australian Securities Exchange (ASX) and analysed them based on ‘Event Study’ method. Here, we use the 10‐days window for the event of official announcement of the COVID‐19 outbreak in Australia on 27 February 2020. The findings of the study show that on the day of announcement, the indices for food, pharmaceuticals and healthcare exhibit impressive positive returns. Following the announcement, the telecommunications, pharmaceuticals and healthcare sectors exhibit good performance, while poor performance is demonstrated by the transportation industry. The findings are vital for investors, market participants, companies, private and public policymakers and governments to develop recovery action plans for vulnerable sectors and enable investors to regain their confidence to make better investment decisions.
ISSN:0004-900X
1467-8454
DOI:10.1111/1467-8454.12215