The Resilience of Islamic Equity Funds during COVID-19: Evidence from Risk Adjusted Performance, Investment Styles and Volatility Timing

The COVID-19 pandemic has disrupted every facet of life globally. Business and commerce are key areas where the monetary crunch has been acutely felt. This study aims to analyze the various key changes in entities' activities to evaluate the level of business performance in response to the COVID-19 pandemic. For this purpose, we use panel data analysis on 218 Romanian listed companies of different sizes (big and small) and belonging to different business sectors for the period June 30, 2019-June 30, 2020. We find that the net profits of the overall market decreased by 37.43% over the analyzed period. However, small companies engaged in agriculture, commerce, construction, IT R&D, and transport and storage witnessed better financial performance. In addition, our results show that equity financing, proper liquidity management, and an increased company size consolidate the economic performance of entities regarding return on equity and return on assets. Our findings are useful for policymakers such as managers and investors and can help them make the best decision for their managing or investing activities. Moreover, governments need to know how companies respond to the pandemic to identify the sectors of activity that are more vulnerable to the crisis' effects and the main financial management decisions that must be adopted by companies during times of crises.

Section: Literature Reviewmentioning

confidence: 85%

The impact of covid-19 on financial management: evidence from Romania

Achim

Safta

Văidean

et al. 2021

“…Notes 1. For recent research work on the impact of COVID-19 on corporate world, firms, financial assets, commodities, crypto currency, asset management, investment, bankruptcy and credit portfolios see, Mirza et al (2020aMirza et al ( , 2020bMirza et al ( , 2020c, Rizvi et al (2020aRizvi et al ( , 2020b, Yarovaya et al (2020aYarovaya et al ( , 2020b, Arif et al (2021), Farid et al (2021, Naeem et al (2021aNaeem et al ( , 2021b, Shahzad, Naeem et al (2021), Yarovaya et al (2021). 2.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

COVID-19 pandemic, economic indicators and sectoral returns: evidence from US and China

Qureshi

2021

This study examines time-frequency connectedness between COVID-19 pandemic and economic indicators through a continuous wavelet transformation approach in the US and China. The study also assesses the dynamic conditional correlations (DCCs) between macroeconomic indicators and domestic sectoral returns during the pandemic. The findings display higher coherencies between COVID-19 and long-term predictive economic indicators in China compared to the US. Moreover, the results indicate that the stock market spillovers are more pronounced on domestic sectoral returns than other economic indicators during the COVID-19 outburst. Besides, the findings exhibit that exchange market instability has significant negative repercussions on the domestic sectors in China, however, weaker correlations are discerned between exchange market and domestic sectors in the US. The findings offer several policy implications and endorsements for portfolio managers, policymakers, practitioners, and other market participants.

“…In the COVID-19 pandemic, Islamic stock markets outperform conventional stock markets. For this reason, during the COVID-19 pandemic, investors prefer Islamic stocks as a safe haven (Arif et al, 2021;Yarovaya et al, 2020). Investors also evaluate investment options according to changing market conditions, depending on the information they have and how this information is perceived.…”

Section: Literature Examining the Effect Of Investor Sensitivity On Financial Markets During The Covid-19 Outbreakmentioning

confidence: 99%

Predicting financial market returns in the presence of health crisis: evidence from conventional and Islamic stock markets

Tuna

2021

The purpose of this study is to examine the usability of the news about the COVID-19 outbreak as a predictor in financial markets. Index values of 11 different sectors in conventional and Islamic stock markets and the index values obtained from COVID-19 deaths, COVID-19 cases and health news were used for this purpose. News variables indices were calculated through Google search volume (G.S.V.) values obtained from Google trend. The daily data between 19 March 2020 and 27 July 2020 were used in the study for 25 index values in total. Regression analysis was used in the study. According to the study results, COVID-19 deaths, COVID-19 cases and health news used as predictors have higher performance than historical return values in all sectors of both conventional and Islamic financial markets. In addition, Islamic stock markets show more attention to the news about the COVID-19 outbreak than conventional stock markets. Accordingly, COVID-19 deaths, COVID-19 cases and health news can be used as effective predictors in Islamic financial markets.