COVID-19’s impacts on the Korean stock market

In this article, we examine the short-term impact of COVID-19 on daily stock market performance in Korea. We find strong evidence of asymmetric effects: although an increase in the number of confirmed cases negatively affected stock returns, returns were unaffected by a decline in the number of cases. We also found that the pandemic’s second wave further decreased stock returns, particularly in the food & beverage sector. Finally, we confirm that a rising number of confirmed cases increases the volatility of the returns. As Korea entered the second and third waves of infection, however, such effects diminished. Policymakers may find our empirical findings useful in their efforts to bolster financial stability, especially when an outbreak of COVID-19 erupts or a COVID-19 style event reoccurs in the future.