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The short‐run response of Saudi Arabia stock market to the outbreak of COVID ‐19 pandemic: An event‐study methodology
Author(s) -
Sayed Omer Ahmed,
Eledum Hussein
Publication year - 2023
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2539
Subject(s) - event study , outbreak , covid-19 , stock market , stock (firearms) , china , pandemic , business , economics , monetary economics , geography , medicine , virology , infectious disease (medical specialty) , context (archaeology) , disease , archaeology
Abstract This paper investigates the short‐term response of the Saudi stock market (Tadawul) to the COVID‐19 outbreak. Event study methodology applied to data derived from the 21 industry groups that constitute the Saudi stock market to calculate abnormal returns for the trading days after the announcement of the COVID‐19 in both China and Saudi Arabia. The results indicate that the estimated CARs for the industry groups and their sum on the event day were not statistically significant. Furthermore, the formal announcement of the first case of the COVID‐19 in China had a negative but not significant impact on the Saudi stock market. In contrast, in the first 9‐days event window, the announcement of the first confirmed case in Saudi Arabia had a negative and significant effect. Moreover, the most negatively affected industry groups were banks, consumer services, capital goods, transportation and commercial services, whereas telecommunication services and food and beverage were positively affected at the event window (+1, +9). In general, the Saudi stock market's response had become weaker in the event windows come after (+1, +9), and different industry groups were found to have different responses to the COVID‐19 outbreak.