Abstract
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.
Highlights
Due to COVID-19, the world’s stock markets tumbled virtually everywhere and in all major economies
COVID-19 causes to increase the demand for medical equipment and medicine which leads to more revenue for pharmaceuticals and healthcare companies
This paper uses the Event Study method to assess the impacts of the declaration of COVID-19 on eight selected industries in Australia
Summary
Due to COVID-19, the world’s stock markets tumbled virtually everywhere and in all major economies. Due to movement control orders, transportation industry as well as energy industry lose huge revenue. Same scenario emerges for all other types of industries that causes massive decline of energy demand. The food industry is dealing with the challenges and opportunities of COVID-19 quite well. Supermarkets and grocery stores did quite well in terms of volume of revenue and profits Many technology companies stop doing business because of shipment delays in electronic goods and in the real estate industry. COVID-19 causes to increase the demand for medical equipment and medicine which leads to more revenue for pharmaceuticals and healthcare companies. The revenue of telecommunications industry boosts up due to high demand of Internet for Online based activities such as remote learning, remote office, etc. We choose to examine the short-term fluctuations of the Australian stock market and check its sectoral performance
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