Impact of COVID-19 Pandemic on Performance of Nigerian Stock Market

This study analyzes the effect of COVID-19 pandemic on the performance of Nigerian stock market. The study uses a number of models that include autoregressive distributed lag, vector auto regression, exponential generalized autoregressive conditional heteroskedasticity and multivariate generalized autoregressive conditional heteroskedasticity models. Findings show that reported cases of COVID19 have causal effect on daily returns of the Nigerian stock market. The results also show that Nigerian stocks are good for portfolio diversification. The results of variance decomposition confirm the declining importance of COVID-19 cases and deaths as the pandemic slows down. Further results show that, for the duration of the crisis, negative news has more effect on the Nigerian stock market than positive news. The Nigerian stock exchange was not immune from the negative effects of the crisis; but its performance when compared with other markets in the study was fairly good. Hence, Nigerian policymakers should continue to provide the enabling environment that attracts investors to the market and at the same time prepare for the contagious effects that come with foreign investment.