COVID-19 And the african financial markets : Less infection, less economic impact ?

Has the relatively low number of COVID-19 cases and deaths saved Africa from the disease's economic and financial consequences ? This article assesses the impact of the pandemic on the volatility of major African stock markets using a panel data model. Like other financial markets worldwide, Africa's have been characterised by increased volatility during the pandemic. The markets appear to respond to the external shocks caused by the health crisis, and Google search volume activity related to the COVID-19 virus, which is treated here as a proxy for panic and fear, is associated with an increase in market volatility of around 7%. For health data, only increases in confirmed cases appear to impact the stability of African markets, and the relatively low fatality rate has had no influence on market dynamics. However, Political responses are associated with a drop in volatility, while the fear of global financial markets exacerbates it. These results have several implications in terms of risk management.

Automated summary

The article assesses the impact of the COVID-19 pandemic on African stock markets. The markets have experienced increased volatility during the pandemic, responding to external shocks and panic. Increases in confirmed cases affect market stability, while the low fatality rate has no influence. Political responses and global financial market fear contribute to volatility reduction.