The Response of the Stock Market to the Announcement of Global Pandemic

Abstract

This research aims at investigating the response of the stock market to the WHO announcement on 11th of March 2020 which officially declares the spread of the COVID-19 virus as a global pandemic. A total of 77 countries’ major indices have been examined by this research. The results show that (1) the pandemic announcement provides considerable negative shock on the global stock market; (2) country with different income presents a different response to the announcement. In general, the stock market in higher-income country tends to be overreacted at the beginning and bounds back more rapidly than lower-income country.