CORONAVIRUS: AN EVENT STUDY OF POSITIVES, DISCHARGES AND FATALITIES AND THEIR EFFECTS ON STOCK MARKET CAPITALISATION IN NIGERIA

Abstract

Nigeria barely came out of the economic crisis of 2016, that the novel coronavirus disease (COVID-19) greeted the soil of Nigeria in February, 2020 like a thief in the night. As at September 27, 2020, while there were 32,730,945

cases of COVID-19 globally, and Nigeria had total confirmed cases of 58,324. Besides the health risk posed by the pandemic, the Nigeria stock market indices such as the market capitalization has been affected too. In a 30-week event study, beginning from 2nd March 2020 and ending on 27th September, 2020, this paper examined the impact of cumulative and new confirmed, discharged and fatal cases of coronavirus on stock market capitalization in Nigeria using Autoregressive Distributed Lag (ARDL) technique. This study reveals the existence of a long run relationship between COVID-19 measures and stock market capitalization in Nigeria. It is also established from the ARDL analysis that except for discharged cases (cumulative and new) which are positively signed with stock market capitalization, both confirmed (positive) cases and fatalities are negatively signed with stock market capitalization in Nigeria. However, only total (cumulative) fatalities and total confirmed cases are statistically significant in explaining the reduction in stock market capitalization in Nigeria. Thus, this study concludes that the cumulative confirmed and fatal cases of coronavirus have significant negative impacts on stock market capitalization in Nigeria. Therefore, there is a need to curtail further spread of the disease in order to reduce the panic created in the stock market. Government’s palliatives targeted at bringing succour to the market in this era of coronavirus, is another step in a good direction.