The impact of the COVID-19 lockdown on stock market performance: Evidence from Vietnam

Abstract

Purpose - This study explores the effects of the COVID-19 outbreak and its following lockdown on daily stock returns in Vietnam, a fast-growing emerging market that successfully revived after the pandemic lockdown.

Design/methodology/approach - This study uses panel-data regression models to evaluate the influence of the daily increase in the number of COVID-19 confirmed cases during pre-lockdown and lockdown on daily stock returns of 723 listed firms in Vietnam from 30 January to 30 May 2020.

Findings - The study confirms the adverse impact of the daily increasing number of COVID-19 cases on stock returns in Vietnam. The study also discloses that the Vietnam stock market before and during the nationwide lockdown performed in opposing ways. Though COVID-19 pre-lockdown had a significant, negative impact on Vietnam's stock returns, the lockdown period had a significant, positive influence on stock performance of the entire market and the different business sectors in Vietnam. The financial sector was hardest hit on the Vietnam stock market during the COVID-19 outbreak.

Research limitations/implications - The study indicates investors' confidence and trust in the Vietnam government's decisions to combat COVID-19 and favorable stocks prices were the main reasons that the Vietnam stock market rebounded during and after lockdown.

Originality/value - This is the first study to examine the impact of COVID-19 during the pre-lockdown and lockdown periods on stock performance in Vietnam, a rapidly developing economy that was successful in controlling the pandemic with a rejuvenated stock market after lockdown.