Impact of COVID-19 on financial integration: Study on BRICS

  • Received October 15, 2021;
    Accepted April 5, 2022;
    Published May 2, 2022
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.19(2).2022.10
  • Article Info
    Volume 19 2022, Issue #2, pp. 119-129
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This work is licensed under a Creative Commons Attribution 4.0 International License

The paper examines the shift in stock indices’ behavior in BRICS nations, prior to and following the outbreak of the COVID-19 pandemic, using daily data of relevant stock indices from April 2019 to March 2021. The study seeks to ascertain the influence of COVID-19 on stock markets of BRICS countries. The descriptive analysis and graphical presentation established that the pandemic period was extremely variable, with high average returns. Furthermore, the findings reveal that, with the exception of China and South Africa, the BRICS nations’ stock indices were not cointegrated prior to the epidemic. Interdependence has increased throughout the epidemic, as three BRICS nation pairings, particularly Brazil and China, China and South Africa, and Russia and South Africa, are all cointegrated. This demonstrates that the COVID-19 problem strengthened the BRICS countries’ cointegration or relatedness. As a result, portfolio diversification opportunities have dwindled. Additionally, given the relatively high average stock indices, investors may generate significant returns by investing in indices rather than individual firms, especially during the pandemic crisis time.

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    • Figure 1. Graphical representation of indices of BRICS countries
    • Figure 2. Graphical representation of return of indices of BRICS countries
    • Table 1. Descriptive statistics during the pre-pandemic period
    • Table 2. Descriptive statistics during the pandemic period
    • Table 3. Stationarity results
    • Table 4. Johansen’s co-integration results
    • Table 4 (cont.). Johansen’s co-integration results
    • Conceptualization
      Namita Rajput
    • Data curation
      Namita Rajput, Sufiya
    • Formal Analysis
      Namita Rajput
    • Supervision
      Namita Rajput
    • Validation
      Namita Rajput
    • Visualization
      Namita Rajput
    • Investigation
      Sufiya
    • Methodology
      Sufiya
    • Software
      Sufiya
    • Writing – original draft
      Sufiya
    • Writing – review & editing
      Sufiya