Abstract
This study investigates the impact of Coronavirus disease 2019 (COVID-19) outbreak on stock market returns in Indonesia stock exchange. Number of positive cases, mortality, recovery, and capital market data were collected for 136 days since the first case was announced in Indonesia (2 March 2020). Panel data regression was employed to test the research hypothesis. The results show that COVID-19 has a negative impact on Indonesian stock market returns. The growth of positive case and deaths decreased the market returns. Meanwhile, the increase of recovered cases is a positive signal for the capital market but it has not contributed to the rise of stock prices and market returns.
Highlights
The Wuhan City Health Commission reported a case/the first case of pneumonia identified as Coronavirus on November 2019 and WHO declared Coronavirus disease (COVID-19) as a global pandemic on March 11, 2020
This study investigates the impact of Coronavirus disease 2019 (COVID-19) outbreak on stock market returns in Indonesia stock exchange
This study examines the impact of the COVID-19 pandemic on stock returns of the Indonesia Stock Exchange by using the Market to Book Value (MBV) variable
Summary
The Wuhan City Health Commission reported a case/the first case of pneumonia identified as Coronavirus on November 2019 and WHO declared Coronavirus disease (COVID-19) as a global pandemic on March 11, 2020. The Indonesian government announced the COVID-19 pandemic on March 2, 2020, with 2 people confirmed positive and the number increased to 134 confirmed cases with 5 people died. This study examines the impact of the COVID-19 pandemic on stock returns of the Indonesia Stock Exchange by using the Market to Book Value (MBV) variable. This variable is important to use because it is positively correlated with stock prices and reflects the company's growth in generating net income. This study analyses the impact of various Indonesian government policies in tackling the transmission of COVID-19, such as regional quarantine, lockdown, PSBB, and new normal, which are expected to stop the spread of the virus so that the health aspect becomes the main concern and further efforts to save the Indonesian economy from recession.
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