The Impact of COVID-19 on Stock Market Performance: Evidence from the Dhaka Stock Exchange Indices
DOI:
https://doi.org/10.48165/sajssh.2024.6401Keywords:
COVID-19, DSEX, DSES, DS30, VolatilityAbstract
The COVID-19 pandemic sent shockwaves through capital markets worldwide, and the Dhaka Stock Exchange (DSE) was no exception. This paper examines the impact of COVID-19 on three major indices of the DSE: the Broad Index (DSEX), the Sharia Index (DSES), and the blue-chip index (DS30). Using daily pricing data from January 2015 to December 2021 and employing the GJR-GARCH (1,1) model, the study explores how the pandemic influenced market volatility and returns in the unique context of Bangladesh’s capital market. The findings reveal that (i) the COVID-19 outbreak significantly increased volatility across all three indices, (ii) DSEX experienced the highest volatility, while DS30 was the least affected, and (iii) there was a positive relationship between COVID-19 and market returns during the sample period. The heightened volatility may be attributed to pre-existing struggles in the DSE, the initial panic caused by the outbreak, and the subsequent policy responses. Conversely, immediate policy interventions—such as the introduction of floor prices and circuit breakers—appear to have contributed to positive returns. The study underscores the importance of disseminating positive news and implementing timely market-stabilizing measures to help mitigate the impact of financial shocks.
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