Early stock market response to health pandemics - Evidence from four major pandemic on five industries

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School of Business | Bachelor's thesis
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Author
Date
2020
Department
Rahoituksen laitos
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
16 + 6
Series
Abstract
Modern globally integrated world, where people travel in large quantities rapidly all over the world, provides perfect conditions for viruses and bacteria to quickly spread internationally. Infections cause health epidemics that can have substantial human, economic and societal consequences. As health epidemics become pandemics, they cause widespread implications to consumers’ and companies’ demand, which has an impact on global markets and value chains. This has caused multiple severe local or global economic crisis, impacting the value created by industries. In this thesis, I study how pandemics impact stock market performance during the first four months of the pandemic outbreaks. The pandemic outbreak I chose for analysis are Asian flu, SARS, swine flu and COVID-19, which are all pandemics that have taken a global scale, while they have caused to restrict the spreading, limited mobility of people, sped up vaccine and medicine development and laid fear among people and markets of the scale of death they might impact. I research the market responses of five different industries; drugs, aeronautical, transportation, oil and retail. The research question is whether there is a significant relationship between first four months of pandemics to industries stock portfolio performance. Based on the empirical study, I show that at 95% confidence level, there is no significant relationship based on the data. However, at 90% confidence level there is a significant relationship with transportation and oil industry performance. The biggest challenge with the study is, that pandemic outbreaks are very different in their characteristics for spreading and impact, thus the market reactions on different industries may vary substantially.
Description
Thesis advisor
Ungeheuer, Michael
Keywords
pandemia, osakemarkkina, globaali, osakemarkkinavaikutus
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Citation
Permanent link to this item
https://urn.fi/URN:NBN:fi:aalto-2020120656099
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[kand] Kauppakorkeakoulu / BIZ