Impact of the COVID-19 on stock returns: Evidence from Borsa Istanbul

Abstract

Introduction: COVID-19 pandemic, which was first occurred in China in December 2019, has affected the world’s economy. Negative effects of the virus have been seen in financial markets. So investors start to search for safehaven properties. Aim: This study aims to investigate the effects of COVID-19 on Borsa Istanbul Sustainability Index returns. Specifically, the impacts of COVID-19 case growth and COVID-19 based death growths on stock returns are considered. Method: Two different models are created in order to test the hypotheses. In the first model, we mainly investigate the impact of the growth rate of COVID-19 cases on stock returns. Furthermore, we examine the impact of COVID19 based death growth on stock returns. Fixed effect panel regressions are used in the analyses. Findings: According to the empirical results, as the COVID-19 cases grow, the stock returns of the selected firms decrease. However, as the COVID-19 based death numbers grow, the stock returns increase. Higher rate of COVID-19 cases compared to COVID-19 based death might be shown as a reason for this result.