Our stock market has remained closed since last two month when the government announced the countrywide lock down. After longer closure of 50 odd days, market opened only for 2 days ( March 12 & 13) and again remained closed as complete negative circuits were observed. Unlike the usual, market was opened with altering the general settings of the operational rules. It seems that we were scared to face the impact of pandemic having pre-occupied notion that the market will go on free fall. In those past couple of months, the world’s major stock markets have undergone some major changes that leads to retracement & rebound after the fall and backing from the bottom. The core reason for why the recovery will look different in different market is that this crash has been caused by a single, surprise event.
Here, I have tried to explore the market movement in those countries, which are badly hit by the Covid-19 and possess highest number of death cases till 20-05-2020 as per WHO.

Fig.1. Covid death cases till 2020-05-20 (Data Source: WHO)

Overview of world’s major indices
(The detail charts of market movement is depicted in figure 2.)
1. USA- DJIA: The all countries highest number of Covid-death cases are seen in USA. However,      the Dow Jones Industrial Average (DJIA) has climbed 29.30% and reached to 24604.93, reflecting optimism the economy will start to recover as states take the measures of revival and first tentative steps to reopen for business. The market was primarily dropped down by 35% from high of 29276.34 and tested the bottom of 19028.36. Investors and consumers think the U.S. will recover faster from the coronavirus than economists.
2. UK- FTSE100: UK is the second most affected country by Covid-19. Even here, the stock market's climb back by 21.68% and reaches to 6076.75 from the pandemic induced fall of 32.94% pushing to bottom 4993.89.
3. Italy- FTSE MIB: Italy is one of the nations that has been hit particularly severely. The death toll from the illness passed the 32169 mark. As Italy approaches peak Coronavirus, markets get a better timeline and recovered by 14.90%  despite of the fall of 41.20%.
4. France- CAC40: Markets now wary of pandemic scarring. In effect, just dating the start of the recovery from the lifting of lockdowns alone, market recovered by 19.76% after the downs of 37.58%.
5. Spain- IBEX35: The IBEX 35 decreased 37.78% since the beginning of 2020. Now, it gained 9.44% to reach at 6684 point, boosted by hopes of a global economic recovery.
6. Brazil- BONVESPA: Recovery of 29.02% could be seen in Brazil stock market after the steep decline of index by 38.27% before.
7. Belgium- BEL20: Market boosted up by 18.39% after the sharp decline of 30.52% before.
8. Germany- DAX: In Germany, DAX also rebounds by 32.96% with its previous bottom of 35.24% due to the impact of Covid-19.
9. Iran- TEDPIX: Unlike other countries, the market index didn’t fall in Iran though the country is badly hit by the Coronavirus and the no. of death toll crosses 7183 mark. The TEDPIX is a major stock market index, which tracks the performance of the major companies listed on the Tehran Stock Exchange. It increased by 596861 or 113.94% since the beginning of Corona cases, 2020.
10. Canada- S&P/TSX: The market index took the bottom of 11255.16 with the fall of 32.45% due to the pandemic. However, it gets recovery of 33.31% and now reached to 15003.77 point.
11. Netherlands- AEX: The recovery is 31.61% from the impact that caused the market fall by 29.18%.
12. Mexico- S&P/BMV IPC: Initially, the market drops down by 20.68% responding the pandemic but now it has regained by 9.09% as the investor’s confidence gradually scaling up.
13. China- SSEC: China is the country of origin of Coronavirus. Initially the market dropped by 14.36% but it has already started early recovery  and the SSEC index now reached to 2883.74 with the gain of 8.46%
14. Turkey- BIST 100 (XU 100): At the begin of Covid cases, the market responded by total fall of 24.94% and tested the bottom of 82988.94. It has now regained by 23.10% and reached to 102157.53 point.
15. Sweden- OMXS30: The market now rebounded by 21.06% and reaches to 1556.44 point. Earlier, It was dropped by 25.30%.
16. India- BSE: The Indian equity market bounced back valiantly by 18.28% and the BSE index reaches to 30818.61. Earlier, it was dropped by 33.68% from all time high of above 40000 mark to the bottom of 26055.78 point. Investors are getting some cold comfort on the recovery of the market.
17. Russia- RTSI: Russian stock market (RTSI) also dropped by 41.47% in early response to pandemic. However, it has now rebounded by 35.07% from the bottom of 902.63 and reaches to mark 1219.20.

Fig. 2. Market indices of major economies, which are badly hit by Covid-19 (Starting USA to Russia)
The market data of respective countries is shown in Table 1.
Table 1. Highlights of market indices of major countries, which are severely affected by Covid-19.
SN
Country
Market Index
High
Low
Index as of 2020-05-20
Fall   (%)
Rebound   (%)
H-Index
Date
L-Index
Date
1
USA
DJIA
29276.34
11.02.2020
19028.36
23.03.2020
24604.93
-35.00
29.31
2
UK
FTSE100
7446.88
10.02.2020
4993.89
23.03.2020
6076.75
-32.94
21.68
3
Italy
FTSE MIB
25477.55
19.02.2020
14980.34
16.03.2020
17212.50
-41.20
14.90
4
France
CAC40
6015.67
10.02.2020
3754.84
18.03.2020
4496.98
-37.58
19.76
5
Spain
IBEX35
9816.00
10.02.2020
6107.20
16.03.2020
6682.00
-37.78
9.41
6
Brazil
BONVESPA
102983.54
27.02.2020
63569.62
23.03.2020
82015.62
-38.27
29.02
7
Belgium
BEL20
3639.51
27.02.2020
2528.77
17.03.2020
2993.80
-30.52
18.39
8
Germany
DAX
13035.24
24.02.2020
8441.71
18.03.2020
11223.71
-35.24
32.96
9
Iran
TEDPIX
405263.00
08.02.2020
468421.00
16.03.2020
1002124.60
15.58
113.94
10
Canada
S&P/TSX
16662.61
27.02.2020
11255.16
23.03.2020
15003.77
-32.45
33.31
11
Netherlands
AEX
569.77
27.02.2020
403.52
18.03.2020
531.06
-29.18
31.61
12
Mexico
S&P/BMV IPC
41502.32
27.02.2020
32917.61
23.03.2020
35909.27
-20.68
9.09
13
China
SSEC
3104.65
14.01.2020
2658.84
23.03.2020
2883.74
-14.36
8.46
14
Turkey
BIST100 (XU100)
110558.78
27.02.2020
82988.94
23.03.2020
102157.53
-24.94
23.10
15
Sweden
OMXS30
1721.19
27.02.2020
1285.66
23.03.2020
1556.44
-25.30
21.06
16
India
BSE
39288.45
18.02.2020
26055.78
23.03.2020
30818.61
-33.68
18.28
17
Russia
RTSI
1542.11
07.02.2020
902.63
19.03.2020
1219.20
-41.47
35.07
Average
-29.12
27.61




From Table 1, we see that the average fall of stock market indices in the world’s major economies is recorded to be 29.12%. The highest drop down could be seen in the Brazil followed by Spain & France. Market index in Iran is noteworthy; as it does not fall, instead it is rising to go rising. Similarly, the average rebound in the world’s major stock market is documented to be 27.61% that shows the gradual increment in investor’s confidence. The ever increment and all time higher index is noted in Iran along with quicker recovery in Russia followed by Canada and Germany.


[Disclaimer: This chart is based on my personal analysis using the data from Table 1. I have gone through comprehensive review of world’s major stock markets, which are seriously hit by this pandemic and found that almost all markets have a specific pattern they all follow]

Mad March
As we look in the Table 1., overall stock markets of the world declined over 29% by March and most of the markets reached to the bottom. Turmoil in global financial markets heightened in this month and implied the highest volatilities of equities. Interestingly, we could note that 23rd of the March was documented as the day where most of the world markets get to the bottom. In general, 3rd week of the March was observed as the worst period for world’s stock market. Many researchers called this event as Mad March relating to the story of a European hare having an old English idiom "mad as a March hare". March is the breeding season of the European hare, Lepus europaeus, who behaves in the excitable and unpredictable manner.

What would be the likely scenario in Nepalese stock market?
If our stock market, had it been running regularly, we could also expect the likely scenario of correction, retracement and rebound. It has already started correction from the peak point of 1632.18 on dated 27 Feb, 2020.  Though the rising hustle is supported by the massive volume of single day turnover ever setting the new benchmark of 4.84 billion, it dropped down upto 1251.46 point till dated 2020-03-22, only in 14 days transactions.  It is about 23.32% of correction. It shows the maturity of the investors in our market, who were trying to discount the overall impact on the economy before buying the stocks.  If the market was regular, in those ample days it will sure come to the expected bottom and will be in either consolidation or rebound to some extent as like other market. However, we decided to close our only market with the fear of free fall, ignoring the general fact that the market pressure couldn’t be controlled by closure. It is only a short-term measure, which may leads to a disaster.  The only expectation from the real investors are; let to leave the market in its natural settings.

Blunders on crazy opening of market:
There were no logics on opening the market for 2 days in between, other than absolute pressure of the investors.  Regulators and government were not able to come up with compensating packages and injecting sufficient liquidity in the market rather they come up with imposing certain restrictions on general operations. They were not even able to put their sincere effort towards market development & promotion of online trading. Moreover, they come up with giving clear indication that market will sure fall to its maximum extent. The change of circuit breaker rule to max of -3% for a company and total of -2% for market index became the slow poison for the investors. No investors will invest in the market, if the clear indication is given it will fall further. Why should I buy today? If I can buy the same with 20% less very soon. The tick size reduction also reduces the liquidity and market volume as there is a thinner margin to play by the willful investors. Further, the requirement to have connect IPS system and mandatory for margin deposit of minimum 25% in brokers account impede the usual entry of buyers in the market.  In my view, the low volume and transactions in multiples of 10 kitta on those 2 days were not the speculation and manipulations. It’s reflect the real mentality of the investors, which is right.

If the market, had it been in natural settings, the price will severely fall for few days.  Over-viewing the market scenario and falling price below their estimation, the smart investors will enter to the market with aggressive investment strategy with the mindset of fear of missing out.  That will stabilize the market. Unfortunately, this couldn’t be happened.

When we look at the past event of devastating earthquake- 25.04.2015, market was resumed on 24.05.2015 with the opening index of 938.19, after few (30) days of closure. It sharply declined for straight 5 days and reached the bottom of 841.96 point dropping down by 10.26%  and being regular it started to rebound after mere 5 days of transactions.

Are we really scared?
My point is that such catastrophic or pandemic events that impose uncertainty to some extent, used to come in the market time and again. The ups and down is the market phenomenon. It’s the beauty of the market. Market go down to come up. Market always gives us the opportunity. The falling market is the opportunity to accumulate future wealth. We are born to die. We have many uncertainties around us except this pandemic. Very recently, we have the problem of border dispute with India. Just yesterday, we felt shock of earthquake. Today, we heard the plane crash in Pakistan occurring multiple number of deaths. Every day, millions of people used to die because of accidents and other unlikely events.  This Covid-19 is a single surprise event. Its getting towards saturation in the major countries. Sooner or later, its vaccine or medicine could be developed and hope that the everyday life will come in new normal. But there is another, worst-case possibility: that no vaccine is ever developed (Picheta, 2020).

What happens if a corona virus vaccine is never developed?
Still we need not to worry much, It has happened before. There are some viruses that we still do not have vaccines against. The nature will provide the solution on how to handle the situation. Instead of wiping out Covid-19, societies may instead learn to live with it. In long run, Mankind will develop the antibody in mass level and will defeat the infection. In support, many researchers even claim that Corona virus should spread to its maximum extent up to 60-70% of the world’s population so that humankind will naturally develop the antibody in community level and impose resistance against the virus.  Academics and researchers from Imperial College London have provided analysis of the economic impact of COVID-19 and offered V-shaped economic recovery (Wilson, 2020). Any dream of a V-shaped recovery in our context, in my opinion, is way too optimistic. However, it’s not beyond presumption. Well said by the investment legend Warren Buffet “Be greedy when others are fearful and be fearful when others are greedy”. If you have the real gut to succeed in the market then move with your strong determination and solid strategy. If you are truly living in your destiny, the whole universe will conspire you to meet your destination.

Summary
Based on the review of the world’s stock market scenario and the Nepalese market sentiment, we could assume that our market will also be negatively affected for certain days by the ongoing impact of pandemic. It will saturate and reach to the bottom soon; then it may stabilize or move to rebound with the increased level of investors’ confidence. It is always better to let the market run in its natural settings. We should not attempt to stop the market momentum from its way of natural falling or rising though many reforms should be made to develop the only stock market of Nepal as a whole.  

References:

 Carroll, L. (1865).  Alice's Adventures in Wonderland. Lewis Carroll

·         Wilson, J. (2020). The economic impact of corona virus: analysis from Imperial experts. Published on 13 May 2020

·         OECD (2020). Global financial markets policy responses to COVID-19. OECD Retrieved 2020-05-14.

·         Chaudhary, F.S. (April, 2020). Stock Market recovery or dead cat bounce?

·         Picheta, R. (2020). What happens if a corona virus vaccine is never developed? It has happened before. CNN (Rob Picheta, 4 May, 2020)
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