Journal de Stock & Forex Trading
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The Effects of COVID-19 Pandemic on Stock Market Performance in Africa

Isiaka Akande Raifu*, Terver Theophilus Kumeka

This study is conducted to investigate the response of stock market returns to daily growth in COVID-19 confirmed cases and deaths in 14 African countries using both time series and panel approaches. The study employs three estimation methods, Ordinary Least Squares/Robust Ordinary Least Squares (OLS/ORLS), Pooled Ordinary Least Squares (POLS) and Panel Vector Autoregressive (PVAR). While the OLS and POLS are used to examine a conditional mean effect of COVID-19 confirmed cases and deaths on stock market returns PVAR is used to estimate and trace the response of stock market return to shocks from daily growth in COVID-19 confirmed cases and deaths. OLS results show that stock market returns react negatively and significantly to daily growth in COVID-19 confirmed cases in countries like Botswana, Kenya, Tanzania, Tunisia and Uganda while the negative effects of daily growth in COVID-19 confirmed deaths on stock market returns are negligible. Evidence from POLS reveals that the impacts of an increase in COVID-19 confirmed cases and deaths are insignificant. This is corroborated by the results of FEVD. IRF results show that stock market returns react positively to COVID-19 confirmed cases and deaths shocks before declining and returning towards normal returns in the long-run. Our findings underscore the importance of analysing individual country’s socioeconomic reaction to COVID-19 pandemic instead of pooling countries together.