{"id":8294,"date":"2023-11-14T13:36:39","date_gmt":"2023-11-14T05:36:39","guid":{"rendered":"https:\/\/www.ukm.my\/jem\/?post_type=article&p=8294"},"modified":"2024-02-02T18:32:27","modified_gmt":"2024-02-02T10:32:27","slug":"does-mco-truly-assist-the-islamic-stock-market-to-rebound-amid-covid-19","status":"publish","type":"article","link":"https:\/\/www.ukm.my\/jem\/article\/does-mco-truly-assist-the-islamic-stock-market-to-rebound-amid-covid-19\/","title":{"rendered":"Does MCO Truly Assist the Islamic Stock Market to Rebound Amid Covid-19?"},"content":{"rendered":"

The Covid-19 pandemic is likely to affect stock markets negatively as observed by past studies that the hedging effectiveness of Islamic stocks declines due to Covid-19. The subsequent effort to bend down the uprising cases of Covid-19 is through limited movement order, which on the other hand, may aggravate the situation if economic sectors are not allowed to operate. Hence, this study aims to examine the potential moderating role of government stringency order on the relationship between Covid-19 and Islamic stock market performance across the globe. Based on the panel cointegration analysis, the findings show that the adverse effect of Covid-19 on Islamic stock prices can be mitigated by executing the government’s stringency policy. This study contributes to the existing literature by arguing that MCO, which is originally meant to curb Covid-19, can also affect the relationship between Covid-19 and stock prices, which signals the need to further preserve and enhance the Islamic value of Islamic stocks to be an effective hedging tool. This is because rather than focusing on strengthening the Islamic principles in the businesses, the loosening of Shariah conditions has been the main reason for more companies to be considered Shariah compliant. Nonetheless, although MCO seems to be empirically effective in reversing the adverse effect of Covid-19 on stock prices, sub-analyses serve as a reminder that the imposition should be done with more caution, as in several sub-regional analyses, it does not seem to work well. Rather than imposing MCO, this study would prefer to suggest more focus only on mask-wearing and social distancing to ensure that the economy can continue active. <\/em><\/p>\n

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