WILL COVID-19 PANDEMIC ALIGN STOCK RETURNS TO GDP GROWTH IN KENYA?

PDF

Published: 2022-10-15

Page: 1128-1132


OBURA POLYCARP *

Nairobi University, Kenya.

*Author to whom correspondence should be addressed.


Abstract

Many countries are experiencing slow economic growth and reduced activity at the stock market. Stock markets always provide the vital role of acting as a leading indicator for economic growth. Even though there is no consensus on whether the two variables are positively or negatively correlated from previous studies, there is unanimity to the fact that stock market returns greatly affect economic growth of a country like Kenya.

This review offers an intensive and extensive literature review of how stock market returns will correlate to economic growth in this period and factors that might influence the resultant behavior. The review also investigates whether factors Kenyan Stock returns are going to be aligned to the GDP influenced by factors such as foreign investments, disposable income, dominant stocks and investor sentiments.

This review established that the growth in Kenya's GDP, like that of many countries, will follow stock market returns in slowing down in response to the pandemic. This is attributed to reduced propensity to invest caused by reduced disposable income job losses and negative investor sentiments. The study advices stakeholders to pay keen attention to the Kenyan stock market returns in order to project economic growth if the market is devoid of interferences. The government is urged to cushion businesses and employers from the harsh economic tides in order to avail disposable income to as many people as possible who will in turn invest in stocks.

Keywords: Pauropsylla depressa Crawford,, Attention theory, Ficus glomerata Roxb, cyclical movement, gall, disposable income, ecology, dominant stocks, photosynthesis, investor sentiment, globalization


How to Cite

POLYCARP, O. (2022). WILL COVID-19 PANDEMIC ALIGN STOCK RETURNS TO GDP GROWTH IN KENYA?. Asian Journal of Advances in Research, 5(1), 1128–1132. Retrieved from https://jasianresearch.com/index.php/AJOAIR/article/view/327


References

Baker, Nicholas B, Steven JD, Kyle JK, Marco CS, Tasaneeya V. The Unprecedented Stock Market Impact of COVID-19. Scott R. NBER Working Paper No. 26945; 2020.

UNDP Kenya. COVID-19 Pandemic. Humanity needs leadership and solidarity to defeat COVID-19; 2020.

Available:https://www.ke.undp.org/content/kenya/en/home/coronavirus.html

Trading Economics. Kenya leaves monetary policy unchanged; 2020.

Available:https://tradingeconomics.com/kenya/news

Okoth J. How COVID-19 is impacting Kenyan’s economy; 2020.

Available:https://kenyanwallstreet.com/foreign-investors-take-out-ksh-11-7-billion-from-nse-in-q1-2020/

MSI Barra. Is there a Link Between GDP growth and Equity returns? MSI Barra Research Bulletin May 2010; 2010.

Reddy DVL. Impact of Inflation and GDP on stock market returns in India. International Journal of Advanced Research in Management and Social Sciences. 2012;1(6).

Adoms Y, Okaro, Ogbonna. Stock Market Development and Economic Growth: A Comparative Evidence from two Emerging Economies in Africa – Nigeria and South Africa. Archives of Current Research International. 2020;11(1):1-15, 2017.

Article no. ACRI.38116 ISSN: 2454-7077

Papakyriakoua P, Sakkasa A. and Taoushianis Z. The impact of terrorist attacks in G7 countries on international stock markets and the role of investor sentiment. Journal of International Financial Markets, Institutions and Money 2019; 2019.

Hai Yue L, Aqsa M, Cang Yu W, Lei Z, Zaira M. International Outbreak and Affected Countries Stock Markets Response. International Journal of Environmental Research and Public Health 2020; 2020.

Odhiambo J. Impact of COVID-19 to the Economy of Kenya; 2020.

Available:https://uonresearch.org/blog/impact-of-COVID-19-to-the-economy-of-kenya/

Odhiambo J, Weke P, Wendo J. Modeling of Returns of Nairobi Securities Exchange 20 Share Index Using Log-Normal Distribution; 2020.

Swab C. GDP and index returns are in measured in U.S. dollars indexed to the start of 2006 for comparison purposes. Past performance is no guarantee of future performance. Source: Bloomberg data as of 7/30/2018; 2018.

William JB, Robert DA. Earnings growth: the two percent dilution. Financial Analyst Journal. 2003;47–55.