Effects Of COVID - 19 Fears On Japanese Stock Market Performance

Abstract

This paper is objected to investigate on the Japanese investor behavior during the outbreak of Covid – 19 pandemics. Covid – 19 Fear Index construction is applied with search volume data from Google Trends and weekly stock returns from the most three popular indices of Tokyo Stock Exchange market (TSE). After the data analysis, our findings indicate that the uncertainties of investors play an important role in shaping market trends. There is a negative correlation between the Search Volume Index and stock market returns which is consistent with previous studies. In order to estimate exactly the relation, we conducted the OLS Regression Analysis to evaluate the coefficient points. Also, we investigate macroeconomic control variables to make the general conclusion and avoid random variables. At the end, we made a conclusion that investor sentiment is one of the main factors that can make enormous impacts on market returns. Investor sentiment was affected by the fear of Covid – 19 and increasing uncertainties about future. However, the changes in weekly new Covid – 19 cases do not play the main role in making impacts on Covid – 19 Fear and hence the stock returns, while investors are more affected by government measures and national policies which are expresses as detail below papers.