Abstract
Abstract This paper assesses the impact of outbreaks from the perspective of volatility of Malaysian Listed Property Companies in mixed-asset portfolios, concentrating on periods of time between outbreaks. The real issue of this study is the health crisis that has troubled institutional investors, as it has already significantly impacted the returns on investments. Investors need to be better informed on the impact of health outbreaks on investments in order to minimize their impact. To assess the impact of the outbreaks, the GARCH method has been employed to examine the dynamic volatility of listed property companies in mixed-asset portfolios. The volatility level will give investors better information from point of view of the dynamics of volatility of the Malaysian listed property companies’ performance within mixed-asset portfolios. The findings show that listed property companies demonstrate high volatility compared to other mixed-asset portfolios during the periods of outbreaks. This indicates Malaysian listed property companies were the most volatile investment in mixed-asset portfolios. This empirical study will contribute significantly to institutional investors, especially in terms of the investment decision-making process during outbreaks.
Highlights
The recurrence of several outbreaks such as H1N1 Severe Acute Respiratory System (SARS), Middle East Respiratory Syndrome Coronavirus (MERS-COV) and Coronavirus (COVID-19) have had a significant impact on global economic growth
The results were expected during the financial crisis period as Malaysia experienced the GFC as well as other major outbreaks such as SARS and H1N1 which stimulated high volatility
The results were consistent with an earlier study by Chau and Newell (1997) and Liow (1997), who commented that, when it comes to property companies in Asia including Malaysia, markets were riskier and more volatile due to the high proportion of property activities in regional development
Summary
The recurrence of several outbreaks such as H1N1 Severe Acute Respiratory System (SARS), Middle East Respiratory Syndrome Coronavirus (MERS-COV) and Coronavirus (COVID-19) have had a significant impact on global economic growth. This is evident today, as outbreaks are still occurring These outbreaks are able to create recessions at the global level, which has a drastic effect on humanity. This is due to the unpredictable situation, which depends on the effectiveness of a country’s measures for overcoming the situation. SARS has been considered one of the major endemics which affected 26 countries and resulted in more than 8,000 cases in 2003 This endemic put many businesses in a bad situation in term of revenue and profit. Real estate sectors, which are sensitive to the situation, such as economic and political, have been impacted by the outbreaks. Hong Kong retail sales were down 80% to 90%, restaurants and their suppliers were going broke and hotel occupancy rates were in the single digits (Day et al, 2004)
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