Cyclical and Non-Cyclical Industry Stock Price Reaction towards Movement Control Order (MCO), Economic Stimulus Package and Vaccine Agreement Announcements: The Case of Covid-19

Abstract

This study carries out empirical analyses using a market-model event study from 26 March 2020 to 20 November 2020. There are three major events highlighted in this article that explain the cyclical and noncyclical stock performance during the COVID-19 outbreak: (a) the implementation of the nationwide Movement control order series (MCOs); (b) the announcement of the economic stimulus package; and (c) the signing of the vaccine agreements. Empirical results are summarized into three main insights: (a) the 10-day event window (CAR −9,0), which entailed the first MCO, was marked by the closure of both public and private non-essential entities, further suspension of events and recreational activities, which negatively affected nationwide economics activities; (b) the 3-day event window (CAR −1,1), which entailed the announcement of the economic stimulus package, resulted in most industries reacting with positive returns except for the oil equipment and services industry; and (c) event window day-293 (CAR +131, +161), which entailed the announcement of the distribution and implementation of COVID-19 vaccines, whereby industries related to the healthcare segments such as equipment and services (+0.0694) and pharmaceuticals and biotechnology (+0.0671) showed positively significant returns at least at the 10% level. Finally, future research could enlighten ownership patterns in Malaysia due to Malaysian companies exhibiting a concentrated ownership structure.