How have COVID-19 Confirmed Cases and Deaths Affected Stock Markets? Evidence from Nigeria

Abstract

This study assesses the effect of COVID-19 proxied by the number of confirmed cases of the infection and deaths on Nigeria’s stock market over the 23rd March to 11th September 2020 period using the autoregressive distributed lag (ARDL), canonical cointegrating regression (CCR), dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) techniques. The bounds test to cointegration result reveals that a long-run relationship exists between COVID-19 and Nigeria’s stock market (along with oil prices and exchange rate). The results of the various estimations demonstrate that COVID-19 (proxied by the number of confirmed cases of infection) has a negative and significant impact on stock market performance, while the number deaths has a positive and significant impact on the market in the long-run. In addition, oil prices and exchange rate have a significant and positive effect on stock market performance in the long-run. Similar results were found for sub-sectors including consumer goods and healthcare sub-sectors of the stock market. The study recommends policies to curb the spread of the virus.