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By Stefan Posea 08-04-2020
In: deep-dives | COVID-19 Equities

How Unanticipated COVID Cases Impact Stock Returns

(4 min read)
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One of the most interesting academic papers on pandemics is a new NBER paper on COVID (and SARS) case predictions and stock market returns. The essence of the paper is that “unanticipated” case increases lead to large stock market declines. For example, in the cases of the SARS outbreak, if the latest estimated cases was double the day earlier estimate, then the Hang Seng would fall between 8%-11%. And in the case of the current COVID outbreak, a similar doubling sees a 4%-10% decline in the Wilshire 5000 stock index for the US. The study is still ongoing and so updates are coming soon...

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