COVID-19 Pandemic Impact on Stock Market Performance and Portfolio Management
Overview
This paper examines how government restrictions implemented during the COVID-19 pandemic affected global stock markets and portfolio performance. It analyzes both direct and indirect impacts of social distancing measures, income support packages, and health response policies, arguing that stringent government actions can mitigate negative market reactions by reducing infection rates.
What this essay covers
- Portfolio Management Definition - defines portfolio management and the role of portfolio managers in investment decision-making
- Impact on Stock Market - analyzes COVID-19's adverse effects on stock returns and government policy responses
- Direct and Indirect Effects - examines how government actions directly impact economic activity and indirectly affect markets through outbreak reduction
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STOCK ANALYSIS
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PART ONE
Portfolio management is considered the selection, prioritization, and control of an organization's projects and programs, in line with its capacity to deliver strategic objectives. The primary goal is to balance the change initiatives' implementation and maintain business-as-usual while also optimizing return on investment. On the other hand, a portfolio manager is a professional responsible for making investment decisions and conducting investment activities on behalf of organizations or vested individuals. However, governments' restrictions for mitigating the COVID-19 pandemic impact on public health and the economy had adverse effects on the stock markets, including the portfolio in particular.
Impact on the Stock Market
The study conducted by Ashraf (2020) confirms the adverse effects of the increasing number of COVID-19 cases on stock returns within global markets. The study postulates that various government actions significantly contributed to these impacts. Such actions include social distancing measures, income support packages, in addition to containment and health response. The social distancing measures include the closure of workplaces, public transport, schools, parks, and other public places. The income support packages comprise the government's financial assistance to households in the form of debt relief or direct cash transfers, in addition to other payments for utilities (Tisdell, 2020, p. 18). Containment and health response is primarily concerned with the government campaigns of public awareness and the quarantining and testing policy.
Therefore, these government actions are postulated to, directly and indirectly, impact the stock market returns, particularly on the portfolio.