Stock Market Reaction to Covid-19 Vaccination Rate: International Study

Abstract

Objective: In this study, the relationship between the Covid-19 vaccination rates in different countries and the performance of stock market indices were examined. The study aims to supply further evidence for policymakers to promote vaccination programs.
 Methods: In the study, stock market performances and Covid-19 vaccination data of a total of 49 countries in the MSCI indices were used. Countries are sorted and grouped according to the date they reached the 10%, 50%, and 75% vaccination rates. Afterward, t-tests were used to determine whether there was a difference between the stock market returns of the countries in different groups according to their vaccination performances.
 Results: This research shows that countries with rapid Covid-19 vaccination have lower volatility and higher performance in the stock markets. It has been determined that the stock market performances are higher in the countries which reached the 10% and 50% vaccination level of the population earlier. No statistically significant relationship was found between reaching the 75% vaccination level and the stock market performance. The first quartile of countries that completed 10% vaccination earlier have %9,7 higher stock market performance on average between 31.12.2020-28.05.2021 than the countries in the last quartile. Research results are also robust when tested separately for developed and emerging markets.
 Conclusions: The results of the study show that vaccination has a positive contribution to financial markets. It is thought that the findings obtained in the research provide important information for investors and policymakers.