Abstract

Covid-19 has had severe consequences on the financial systems of many countries and has altered the manner in which most businesses operate. This adverse situation has a spill-over effect on financial markets where the market efficiency may have been altered, hence using preCovid-19 strategies for investment purposes may no longer be applicable. Market efficiency, which is closely linked to informational efficiency, depicts the extent to which financial markets adjust quickly and correctly to new information. It is instrumental for fundamental analysis. The aim of this study is to analyze the market efficiency during the pandemic in five major financial markets around the world. Using the runs tests, the results indicate that the market efficiency in the JSE and JPX-Nikkei 400 has been altered significantly, while the Nasdaq Index, DAX, and CAC 40 have not changed from what it used to be. This was evident in the significant difference between the expected number of runs and the total number of runs, as indicated by the runs test. The implication of this study is that investment professionals in the JSE and JPX-Nikkei 400 should alter their investment strategies, without which they may incur severe losses.

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