Stock Market Performance Research Articles

The Reactive Strategy During the COVID-19 Crisis: A New String to the Bow of CSR

This study aims to study the impact of the COVID-19 outbreak on stock market performance and determine whether firms with a reactive corporate social responsibility (CSR) strategy (compared to those with a proactive and strategic strategy) were less affected. Focusing on a sample of 217 French firms, the event study approach is applied to examine change in the stock prices of socially responsible firms at the announcement of COVID-19 as a pandemic. The results show that stock prices dropped significantly as a reaction to the COVID-19 outbreak, particularly for the proactive CSR group compared to the reactive CSR group. The results also show that the reactive CSR group resisted more in the longer term. Furthermore, an investment strategy aiming at buying reactive CSR firms and or selling proactive ones would have earned abnormal returns. However, the investment strategy is not fruitful when we consider reactive CSR stocks and strategic firms.

UNVEILING ECONOMIC DISTRESS IN SOUTH ASIA: DOES STOCK MARKET PERFORMANCE MATTER?

This study explores economic misery determinants in South Asia from 1990 to 2022, focusing on the moderating role of stock market performance. Economic misery, the dependent variable, is analyzed in relation to stock market performance, interest rates, education, population density, economic growth, remittances, and the interaction between stock market performance and interest rates. Using an autoregressive distributed lag model, results reveal shaded connections. Stock market performance shows a non-significant negative coefficient, while interest rates exhibit a substantial negative coefficient, indicating a strong association with reduced economic misery. Unexpectedly, education levels have a positive coefficient, while economic growth, population density, and remittances display negative coefficients, suggesting their roles in mitigating economic distress. The moderation effect of stock market performance and interest rates is notably significant, emphasizing their interplay in alleviating economic distress. Policymakers are urged to implement prudent monetary policies for interest rate stability, prioritize education, foster economic growth, plan urban development, and promote diversified income sources. Transparent and stable stock markets should be ensured through strategies enhancing investor confidence, establishing safeguards against market manipulation, and incentivizing long-term investments.

Foreign Exchange Rates Dynamics and Stock Market Performance in an Emerging Economy: Evidence from Nigeria

This study focused on the connection between foreign exchange rates dynamics and stock market performance in Nigeria (1995 to 2021). The paper set out to examine the effects of foreign exchange rates movements on the stock market performance in Nigeria. The data for the study were obtained solely from the Central Bank of Nigeria statistical bulletin. The Naira-U.S Dollar, Naira-British Pounds, Naira-Euro, and Naira-Swiss Franc exchange rates were proxies for the foreign exchange rate dynamics, while stock market performance was represented by stock market capitalization. The vector error correction mechanism (VECM) and the Pairwise Granger Causality tests were employed to analyze the secondary data. Results revealed the existence of long run relationship between foreign exchange rate dynamics and stock market performances in Nigeria though with an insignificant impact. In addition, a uni-directional causality was observed running from market capitalization to naira US-dollar exchange rate among others. It was therefore concluded that foreign exchange rates dynamics have an insignificant impact on stock market performances in Nigeria. Thus, there is need to align Nigeria’s economic stabilization policies in order to effectively achieve currency stability (of the naira). Policies such as outright ban on importation of items that can be produced locally should be pursued vigorously. This will no doubt boost aggregate domestic demand for such products and also go a long way in enhancing the value of the naira and by extension stock market outlook in Nigeria.

The Impact of Macroeconomic Variables on Stock Market Performance in Ghana

The study used monthly data from 2010 to 2021 to consider the impact of macroeconomic variables on stock market performance in Ghana. Inflation rates, interest rates, exchange rates, and global economic policy uncertainty were the macroeconomic variables studied. Because the study was based on numerical secondary data, the study used a quantitative research approach. The study employed a correlation test to determine the relationship between variables. Only two of the four macroeconomic variables studied (interest rates and global economic policy uncertainty) had an impact on Ghanaian stock performance, according to the study. The study revealed that Ghana's stock market performance is unaffected by inflation or the exchange rate. Global Economic Policy Uncertainty, Interest Rate, and Inflation had a negative relationship with stock returns and were not statistically significant, however, Exchange Rate was statistically significant and positively correlated with stock returns. The study recommends maintenance and implementation of conservative macroeconomic policies, as changes in macroeconomic variables have an impact on stock returns, to strengthen support from stock actions.

Market Mispricing Timing and Post-acquisition Performance: Evidence from Chinese A-share Firms

This study examines the impact of market mispricing timing on the short-term and long-term performance of acquiring firms in the context of China's capital market. Using a comprehensive dataset of A-share listed companies engaged in mergers and acquisitions (M&A) between 2007 and 2021, we investigate whether M&A activities conducted during periods of market overvaluation lead to enhanced short-term performance while failing to generate sustained long-term benefits. Our findings reveal that acquisitions executed during market overvaluation exhibit significantly improved short-term stock market performance, reflecting the alignment of merger announcements with optimistic investor sentiment. However, such positive effects on short-term performance do not extend to long-term outcomes. The study underscores the critical influence of market timing on the immediate post-acquisition performance of acquiring firms but highlights its limited impact on long-term financial and market performance. These insights contribute to a better understanding of M&A behavior within the Chinese capital market, demonstrating that while capitalizing on market mispricing can yield short-term advantages, sustainable long-term gains hinge on other factors beyond market timing.

Central Bank COVID-19 Policy and Equities Market Sensitivity in Europe and the U.S.

With the beginning of the COVID-19 pandemic, the Federal Reserve (Fed) as well as the European Central Bank (ECB) have pursued a very expansionary monetary policy to mitigate potential economic impacts. In 2022, inflation fears caused bond yields to rise significantly, and the prevailing academic view is that this environment has a negative impact on stock market performance and high-growth stocks in particular. In this paper the performance of stock markets STOXX Europe 600 and S&P 500 is analysed in relation to the central bank policy from 2020 to 2022. The assumption is that the outperformance of single sectors was due to interest rates and a mean-reversion process will occur in 2022. The results of the paper show no significant correlation between interest rates and sector outperformance but between both indices. On this basis, further research on individual sectors, stocks, and other possible variables such as inflation is recommended.

Stock Market Performance during Covid-19 Lockdown : A Descriptive Analysis of Nepal Stock Exchange

This article aims to investigate how the Nepalese stock market behaved during the government-imposed closure to combat COVID 19. In order to analyze the secondary data from March 2020 to September 2021, the time period was divided into three parts: first part is the first lockdown period, second part is the time following the first lockdown and the time before the second lockdown, and the third part is the second lockdown period. The Nepse Index was used as the dependent variable in an OLS regression, while the sub-indices were used as the independent variables. To reduce the issue of heteroscedasticity, all the study variables were transformed into their natural logarithmic forms. Since the study's variables were time series data, the stationarity test was also carried out to produce reliable OLS regression findings. The findings show that the lockdown imposed by the government owing to COVID 19 caused a sharp decline in the share price of all indices on the Nepalese stock market. However, as soon as the lockdown was released, the market began to recover, and the share values began to rise significantly. The findings show that banking and non-life insurance have a significant positive impact on Nepse performance over all three periods, even if the impact of finance was never felt during the study period. Using the study's informative data, investors can manage their share portfolio in unexpected and bad circumstances.

Uncovering the Effect of News Signals on Daily Stock Market Performance: An Econometric Analysis

The stock markets in developing countries are highly responsive to breaking news and events. Our research explores the impact of economic conditions, financial policies, and politics on the KSE-100 index through daily market news signals. Utilizing simple OLS regression and ARCH/GARCH regression methods, we determine the best model for analysis. The results reveal that political and global news has a significant impact on KSE-100 index. Blue chip stocks are considered safer investments, while short-term panic responses often overshadow rational decision-making in the stock market. Investors tend to quickly react to negative news, making them risk-averse. Our findings suggest that the ARCH/GARCH models are better at predicting stock market fluctuations compared to the simple OLS method.

The Influence of Markov Chain and Properties of Principal Component Solutions in the Analysis of Share Price Movements for Stock Market

Purpose: Stock market performance and operation have been widely recognized as a viable investment field in financial markets. Therefore, this paper studied the stochastic analysis of the Markov chain and PCA in the closing share price data of Access and Fidelity banks (2016-2022) through the Nigeria Stock Exchange. The share prices were transformed into a 3-step transition probability matrix solution to cover this number of years.Methodology:This research uses the Markov chain method, which defines a stochastic process. Mathematically, a stochastic process can be defined as a collection of random variables ordered in time and determined at a series of time points that may be continuous or discrete.Findings:The criteria for obtaining four share prices formed from the two merged banks' 2x2 matrices were given, and analytical solutions of principal components were considered for future stock price changes.Implication: The solution matrix of the two merged banks showed that they have the best probability of price increasing shortly: 12%, the best probability of reducing in the future by 22%, and the best probability of no-change shortly by 21%, which is a tool for proper decision making in the day-to-day management of the bank; which shows it is profit making organization and are hopeful for future investment plans both short or long term respectively.

Does weather anomaly still affect the emerging stock market under the unexpected event? New evidence from the COVID-19 pandemic

This paper examines the impact of COVID-19 nationwide lockdown on the relationship between weather anomaly and the Vietnam stock market – a fast-growing emerging market. The paper employs event study methodology to compute the cumulative abnormal return of stocks during the pandemic, and the Holt-Winters Exponential Smoothing model to build the formula for weather anomaly for weather variables. In addition, a t-test is performed to examine the statistical significance of weather variables, as well as the impact that the lockdown order had on stock performance. Cross-sectional analysis by Ordinary Least Squares regression is also applied for estimating the relationship between weather and stock market performance. The finding shows that prior to the COVID-19 lockdown, all of the risk and return indicators, with the exception of idiosyncratic risk, are affected by temperature. After the lockdown order was withdrawn, temperature is only correlated with cumulative real returns and cumulative abnormal returns. Meanwhile, air pressure only appears to have an influence on cumulative abnormal returns after the lockdown, yet being the only meteorological factor that could impact the stock market during the lockdown. Generally, the larger the weather anomaly, the worse the returns and the higher the risks. The paper gives recommendations for listed companies and authorities to have better performance while engaging in and regulating the stock markets. Moreover, the results can be used as a reference for the investing community to incorporate meteorological factors into their analysis.

Macroeconomic Impression and Performance of stock market in India

Macroeconomic Impression and Performance of stock market in India

Overflow Effect of COVID-19 Pandemic on Stock Market Performance: A Study Based on Growing Economy

Purpose. The purpose of this study is to evaluate the effect that COVID-19 has on the performance of the stock market in emerging economies. The findings as a whole demonstrate that the stock market does not react significantly. We believe that the outcomes of this study provide knowledge that is useful for decision makers in financial markets and policy all around the globe. Methods. Data for 140 companies are obtained from the official websites of the companies listed on the Pakistan Stock Exchange. The Wilcoxon signed-rank test was used to determine whether there was a significant difference before and after the pandemic era. In addition, the ARDL model was chosen because of the variable integration mix (order 0 and 1). Implications. Theoretically, it added to the information that was already available about the implications of the COVID-19 pandemic on the performance of stock markets in emerging economies. In a purely practical way, it will help those in charge of making policies come up with plans to deal with things that cannot be predicted. Results. The findings of the analysis demonstrate that the COVID-19 pandemic has caused a 52.85% reduction in the volatility of Pakistan’s net profit returns. The study shows a statistically insignificant negative association between the COVID-19 pandemic and Pakistan’s stock returns. The empirical results of ARDL models provide the first conclusion of the analysis, indicating that the number of long-term connections was greater than short-term connections. Conclusion. According to the findings of the research, the pandemic caused by COVID-19 has a bigger impact on the financial performance of enterprises (both positively and negatively). Some companies are able to maintain their place in the market even if the bulk of the firms see their performance suffer during a pandemic. Originality. We are the first to use the ARDL model to evaluate the effect of the new COVID-19 pandemic on a stock market in a developing nation.

Historical Development of Frontier Stock Markets in Sub-Saharan Africa

Purpose: The purpose of this research is to review and compare the development of the three major frontier stock markets in Sub-Saharan Africa over time. The study provides some narrative around the historical development of each market as well as a theoretical backdrop for stock market development studies. Theoretical framework: The adaptive market hypothesis was used as the theoretical backdrop for the study. The adaptive market suggests that stock markets develop in an evolutionary manner (similar to natural selection). This evolution of stock market development is influenced by changes in investors’ behavior and regulatory standards. Design/methodology/approach: Data was collected from 1993 to 2020 on the IMF market efficiency score, the value of stocks traded, aggregate market capitalization, and the number of listed companies for the sample markets. The study used descriptive statistics and trend analysis to discuss and compare the stock market development indicators across the different selected frontier markets. Findings: The study discovered an improvement in stock market performance across the sample period. The Johannesburg Stock Exchange was found to be the most developed of the three stock exchanges. The Nigerian Stock Exchange was second while the Nairobi Stock Exchange was third. Some factors that erode the performance of these stock markets were also discussed. The practical and social implications: The sample stock markets are the major frontier markets, and so are often the first stop for foreign investors that want to penetrate the Sub-Saharan African markets. The performance of these markets often determines the level of foreign direct investment (FDI) and foreign portfolio investment (FPI) that flow into Africa. Originality/ Value: Few studies have investigated the performance of stock markets in Sub-Saharan Africa. Also, the few studies that investigate the performance of these markets rarely proceed to discuss the market-wide factors that erode the performance of these markets compared to those of developed economies. Some factors like the size of the economy, low financial literacy, misplaced government policies, poor investment culture, buy-and-hold-tight attitude, and high transaction costs were identified and discussed.

The impact of behavioral factors on investment decisions and investment performance in Croatian stock market

PurposeInvestors' behavior in financial markets is often under the influence of various psychological and cognitive factors, as well as personality characteristics. This research explores which behavioral factors and personality traits affect investment decisions and, consequently, investment performance.Design/methodology/approachA survey analysis was conducted on a sample of 310 investors in Croatia. Partial least squares structural equation modeling was used to obtain the results.FindingsOverconfidence heuristic, prospect theory elements, emotions and stability and plasticity (as big two personality dimensions) positively affect investment decisions, while herding has a negative effect. Investment decisions, observed through the preference for long-term investments, consequently have a positive effect on the investment performance satisfaction.Originality/valueThis research proposes a unique comprehensive model of the effect of numerous different cognitive and psychological behavioral factors on investment decisions. Furthermore, the influence of investment decisions on investment performance is observed simultaneously. Understanding human behavior based on their personal characteristics can help investors to make better investment decisions. Advisors can learn from human behavior and guide their clients in the right direction when it comes to stock investment. Scientists will be able to replicate the model with other data and make comparative analyses.

Impact of Covid-19 on Stock Market Indices: Evidence from Colombo Stock Exchange

Purpose: The study intends to address the question, “What is the impact of the Covid-19 pandemic on stock market indices in the Colombo Stock Exchange”. This would support potential and existing investors to understand the behaviour of the stock market during the pandemic to make effective long-term decisions since there are only a few studies currently available in Sri Lankan context.Design/Methodology/Approach: A log-linear multiple regression model was executed whereby the dependent variables, All Share Price Index and S&P SL 20 index, were regressed against independent variables, daily new cases and deaths reported, fiscal and monetary policy measures implemented, and island-wide travel restrictions imposed during the period to analyze the impact of Covid-19 on the financial market over 270 days, from 27th January 2020 to 30th April 2021, covering two waves of the pandemic.Findings: The regression analysis revealed a positive relationship between the stock indices and the number of daily cases and deaths and a negative relationship with the travel restrictions imposed during the period. The policy measures implemented by the Government of Sri Lanka were insignificant in the index movements. Based on the results of this study, a positive impact on the stock indices was discovered during the pandemic; hence investors should refrain from panic withdrawals from the market.Originality: This is among the few studies to analyze the stock market performance during the Covid-19 pandemic adapted to the Sri Lankan context. The variables taken in the study can cover various aspects of the pandemic situation.

The effect of oil price shocks on stock market performance in selected African countries

AbstractThe study's objective was to investigate how changes in oil prices affect stock market performance. The study's population consisted of selected African countries chosen based on factors like the size of their stock markets and whether or not they import or export oil. The world development indicator (WDI) and the OPEC bulletin or website served as sources for the data. The vector error correction model was used to analyse the collected data. Regarding the impact of oil price fluctuations on the performance of the stock market, the findings of the study were mixed. Oil price fluctuations have a positive impact on stock market performance for countries that import oil. For oil‐trading countries, the impacts were found to differ across examined countries. Oil price fluctuations had a mixed effect on both large and small stock markets. This demonstrates how crucial it is to investigate changes in the price of oil and how they might impact stock market performance, particularly in African countries.

China’s Stock Market Trend Prediction Model based on Adversarial Learning

Abstract There are numerous stock market theories as a result of the gradual usage of mathematical models by researchers to forecast equities during the past few decades. By quantifying the rise and fall range, the prediction problem can be changed into a multi-classification problem based on the related data. This paper describes an Adversarial Learning-based stock forecast model by building a three-tier LSTM training network using the Adversarial Learning concept, selecting 300 stocks to represent the overall performance of the Chinese stock market, increasing the proportion of large to small training datasets, and strengthening the model’s ability to obtain detailed information from a small amount of data.

Linkage Between Brand Value and Firm Performance: An Empirical Examination Using Fuzzy Set Qualitative Comparative Analysis

This study is designed with the data of Interbrand for ranking top 100 global brands. In this study, the linkage between brand values and financial performance was estimated using different performance measures that include both stock market and operating performance using Fuzzy Set Qualitative Comparative Analysis (fsQCA) technique. The study investigates the effect of brand value on profitability and shareholder. It is observed that the firms that have superior operating performance result in greater brand valuation. Performance of firms measured through profitability is found to be a significant factor in brand valuation. Brand valuation is also found to be significant determinant of profitability. Thus, higher brand quality improves the likelihood of repurchases and in turn improved cash flows. Firms with high agency conflicts tend to have lower brand value. Higher market valuation positively impacts brand valuation in the context of lower leverage and agency costs. The linkage of brand value to firm performance is the justification for marketer’s investments toward branding initiatives as a mechanism that creates value. This study is the first of its kind to examine the impact of agency costs on brand value using fsQCA technique to understand valuation impact of brands. To measure the effect of branding and marketing initiatives of the firms on financial performance, this study integrated both econometric and financial modeling.

Economic Growth and Stock Market Performance Under Different Regimes in Pakistan: A Comparison of Dictatorial and Democratic Regimes

Pakistan is a developing country with a history of cyclical regimes, from democratic governments to dictatorial reigns. Literature provides inconclusive evidence as to whether democratic governments or dictatorial regimes yield better economic outcomes. This study provides a chronological description of different ruling regimes of Pakistan since 1960 and relates to economic outcomes like economic growth and stock market performance of relative regimes. It is noted that dictatorial regimes in Pakistan had better economic outcomes. It is also noted that dictators enjoyed longer and more powerful tenure in Pakistan, while democratic governments remained very unstable. We argue that better economic and stock market outcomes under dictatorial regime could be a result of consistent and stable policy making. Thus, there is a need to strengthen political processes in the country and devise policies for long time horizons to improve economic outlook of Pakistan.

Stock market performance, COVID-19 related government measures, and immunization: Evidence from the G7

Stock market performance, COVID-19 related government measures, and immunization: Evidence from the G7