Stock Market Resilience: Evaluating Islamic and Conventional Indices through COVID-19 Waves

Authors

  • Zamrud Khursheed University of Management and Technology, Lahore 54782, Pakistan.
  • Moghis Rehman University of Management and Technology, Lahore 54782, Pakistan.
  • Moeez Ahmad University of Lahore, Lahore, Pakistan.
  • Ahmad Ali University of Management and Technology, Lahore 54782, Pakistan.

DOI:

https://doi.org/10.52131/joe.2024.0602.0218

Keywords:

Epidemic Waves, Pakistan Stock Exchange (PSX), KSE-100, KMI-30

Abstract

The study examined the impact of the five COVID-19 waves on Pakistan's conventional (KSE-100) and Islamic (KMI-30) stock indices from March 3, 2020, to August 30, 2022. The DCC GARCH (1, 1) model found weak, predominantly negative connections between COVID-19 cases each day and stock returns. Visual data indicated a slight decrease in both indices as cases increased, reflecting previous findings on pandemics' adverse effects on stock markets. A thorough examination of the linkages between COVID-19 cases and financial indicators using Wavelet Coherence analysis highlighted intricate connections that are important to policymakers and financiers. Pakistan's KSE100 and KMI-30 indices showed a constant significant positive dynamic conditional association that persisted throughout the investigation. This challenges the perception that the Islamic index serves as a safe haven during financial crises. According to the research, Islamic stock markets, as reflected by the KMI-30, were not as protective or as good at hedging during crises like the COVID-19 pandemic. In fact, they were more susceptible to economic downturns. When navigating the effects of global health crises on financial markets, investors and policymakers must have a thorough understanding of these dynamics.

Author Biographies

Zamrud Khursheed, University of Management and Technology, Lahore 54782, Pakistan.

MS Scholar, Department of Banking & Finance

Moghis Rehman, University of Management and Technology, Lahore 54782, Pakistan.

MS Scholar, Department of Banking & Finance

Moeez Ahmad, University of Lahore, Lahore, Pakistan.

PhD Scholar, Lahore Business School

Ahmad Ali, University of Management and Technology, Lahore 54782, Pakistan.

MS (Finance), Department of Banking & Finance

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Published

2024-06-23

How to Cite

Khursheed, Z., Rehman, M., Ahmad, M., & Ali, A. (2024). Stock Market Resilience: Evaluating Islamic and Conventional Indices through COVID-19 Waves. IRASD Journal of Economics, 6(2), 445–474. https://doi.org/10.52131/joe.2024.0602.0218