Performance of the African stock market amid COVID-19 global health crisis: empirical analysis using four events

Abstract

The study employs the market model and event study approach with four events to examine the performance of the African stock market amid COVID-19 global health crisis. We use daily stock market data from 14 African countries (as a proxy for the African market) spanning September 2019 to June 2021 and COVID-19 data to estimate average abnormal returns for Africa. The results show significant positive average abnormal returns in Africa when the WHO announced COVID-19 as a global health epidemic. The events of infections and deaths generated significant negative average abnormal returns while the event of vaccination did not generate any significant average abnormal returns in the market. In as much as pandemics are unpredictable, the African market quickly recovers as depicted by COVID-19; therefore, we recommend to investors, speculators, and portfolio managers not to quickly exit the continent during pandemics.