Global Market's Diagnosis on Coronavirus : A Tug of War between Hope and Fear - Archive ouverte HAL Accéder directement au contenu
Pré-Publication, Document De Travail Année : 2020

Global Market's Diagnosis on Coronavirus : A Tug of War between Hope and Fear

Résumé

The increasing propagation of the coronavirus pushes to urgently rethink the possible consequences for the global markets. The coronavirus combines demand, supply and uncertainty shocks, that would be harmful to the real economy mainly owing to the shutdown of factories and offices and travel restrictions. This would generate international spillover effects. In this article, we provide a first analysis of the stock price responses to the outbreak of COVID-19. To this end, we use an improved event study methodology to test how G7 (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) stock markets react to the rapid emergence of the novel epidemic.Then, we employ the volatility spillover procedure of Diebold and Yilmaz's (2012) to discern to what extent can China be a risk exporter to the G7 countries. Our results reveal that all the G7 stock markets are suffering from uncertainty caused by the COVID-19, but the responses to this shock differ from country to country. Difficulties in trade and travel interrupted the flow of goods and services, with cascading impacts on industries where supply chains depend hugely on supplies from China. In the current uncertain times, China is likely to be the major volatility transmitter (followed by the United States), whereas Japan, Germany, France and Italy are likely to be volatility receivers. The global spread of coronavirus may be an occasion for global value chains to rethink their global strategies.
Fichier principal
Vignette du fichier
Paper G7-Last version.pdf (947.99 Ko) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)
Loading...

Dates et versions

hal-02514428 , version 1 (22-03-2020)

Identifiants

  • HAL Id : hal-02514428 , version 1

Citer

Refk Selmi, Jamal Bouoiyour. Global Market's Diagnosis on Coronavirus : A Tug of War between Hope and Fear. 2020. ⟨hal-02514428⟩

Collections

UNIV-PAU CATT
955 Consultations
465 Téléchargements

Partager

Gmail Facebook X LinkedIn More