Open AccessStock price reactions to the first wave of the COVID-19 pandemic: evidence from Greece
Author(s) -
Evangelos Charalambakis
Publication year - 2021
Publication title -
economic bulletin - bank of greece/economic bulletin - bank of greece
Language(s) - English
Resource type - Journals
eISSN - 2654-1904
pISSN - 1105-9729
DOI - 10.52903/econbull20215304
Subject(s) - stock (firearms) , equity (law) , economics , stock market , business , real estate , covid-19 , stock market index , monetary economics , commerce , agricultural economics , finance , engineering , geography , medicine , context (archaeology) , disease , archaeology , pathology , political science , infectious disease (medical specialty) , law , mechanical engineering
This study investigates stock price performance at the industry level during the first wave of the COVID-19 pandemic in Greece. We identify five periods from January to May 2020, namely the pre-incubation, incubation, outbreak, lockdown, and lockdown lift periods. We provide evidence that industry-level stock returns witnessed their largest drop during the outbreak period. In particular, the travel and leisure, construction, telecommunications, industrial goods, real estate, technology and utility sectors had, on average, highly negative cumulative returns. The results also reveal a partial recovery in equity prices during the lockdown period, possibly due to the announcement of fiscal stimulus measures by the Greek government along with the initiation of the ECB’s pandemic emergency purchase programme (PEPP). The telecommunications, construction, technology, and travel and leisure sectors exhibited the highest performance over that period. We then evaluate the reaction of industry-level stock returns relative to the market index, performing an event study analysis. The empirical findings show that the utilities, telecommunications, personal goods and retail sectors experienced less losses compared with the market index during the outbreak period in Greece. Finally, despite the partial recovery of equity prices in the lockdown period, the results show that the basic raw materials, food and beverage, industrial goods and retail sectors underperformed compared with the market index in the short run.