1. Introduction

On 31st December 2019, the World Health Organization (WHO) identified the first case of COVID-19 in Wuhan China . In early and mid-January 2020, the virus started to spread to other Chinese provinces, supported by a huge movement of people towards their hometowns to celebrate Chinese New Year which turned the outbreak into a national crisis. Although Wuhan officials announced a complete travel ban in terms of its residents on January 23, the virus still spread quickly. The WHO declared a global emergency due to the rapidly spreading of COVID-19 on January 30, 2020. Its only the sixth time that such type of global emergency has been announced, with past examples including that of the Democratic Republic of Congo Ebola outbreak and the Zika virus. Chinese scientists linked this disease to a virus family known as coronaviruses, which includes both the severe acute respiratory syndrome (SARS) virus and the Middle East respiratory syndrome (MERS). According to the Centre of Disease Control and Prevention (CDC), the COVID-19 symptoms may occur within as few as 2 days or as long as 14 days after exposure or contact with an already affected person, which makes it even harder to confirm and control during early stages. By assessing the risk of spread and severity of COVID-19 outside China WHO declared this virus as a pandemic on March 11, 2020. The fatality rate of COVID-19 as compare to other known viruses is quite low, but its infection rate is relatively high (Table 1). As of March 23, China, Italy, and the United States have most of the number of confirmed cases of COVID 19,81601, 59,138, and 31,573 respectively (WHO situation report63, Figure 1). According to CDC and many other researchers at the moment, the source of COVID-19 is unknown and there is no specific vaccine and treatment [13].

Epidemics Fatality Rate (Deaths/Cases) Infection Rate (Per Infected Person)

Epidemics Fatality Rate (Deaths/Cases) Infection Rate (Per Infected Person) Ebola 50% 1.52.5

Ebola 50% 1.52.5

MERS 34.30% 0.420.92

MERS 34.30% 0.420.92

SARS 10% 3

SARS 10% 3

COVID-19 1%3.4% 1.53.5

COVID-19 1%3.4% 1.53.5

Seasonal flu 1%3.4% 1.3

Seasonal flu 1%3.4% 1.3

The WHO and public health officials performed the role of mediator to communicate the risk of

The WHO and public health officials performed the role of mediator to communicate the risk of an outbreak to the investors and it shapes the investors sentiments towards the disease [4]. Investors

an outbreak to the investors and it shapes the investors sentiments towards the disease [4]. Investors sentiments influence the stock markets significantly. When the market is trending upwards and there is

sentiments influence the stock markets significantly. When the market is trending upwards and there less perceived risk then investor behaves more optimistically. When the market is trending downwards

is less perceived risk then investor behaves more optimistically. When the market is trending then investors sentiments become relatively pessimistic and investors will tend to wait to enter the

downwards then investors sentiments become relatively pessimistic and investors will tend to wait market until a revival begins [5,6]. Such situations lead to short term investor overreaction. Shu [7]

to enter the market until a revival begins [5,6]. Such situations lead to short term investor studied how mood affects financial market behavior. The study shows how the fluctuations in investor

overreaction. Shu [7] studied how mood affects financial market behavior. The study shows how the mood directly affect prices for equilibrium assets and projected returns. Researchers suggest that

fluctuations in investor mood directly affect prices for equilibrium assets and projected returns. media coverage also affects the actions of investors, the higher the number of articles relating to

Researchers suggest that media coverage also affects the actions of investors, the higher the number unexpected events, the greater the number of withdrawals [810]. Globalization has linked economies

of articles relating to unexpected events, the greater the number of withdrawals [810]. Globalization worldwide and increased the interdependence of global financial markets in recent years. This increased

has linked economies worldwide and increased the interdependence of global financial markets in interdependence among the global stock markets may have an impact on global investors decisions

recent years. This increased interdependence among the global stock markets may have an impact on asset allocation and on economies as well as economic policies to ensure economic stability [11].

on global investors decisions on asset allocation and on economies as well as economic policies to By using a vector auto regression model, In, Kim, and Yoon [12] examined the dynamic linkages and

ensure economic stability [11]. By using a vector auto regression model, In, Kim, and Yoon [12] interactions between the Asian stock markets and their results showed that the markets became more

examined the dynamic linkages and interactions between the Asian stock markets and their results closely linked during the financial crisis, except Malaysia. For any global financial market analyst, it is

showed that the markets became more closely linked during the financial crisis, except Malaysia. For obvious that stock markets continue to move in the same direction in different countries. There are

any global financial market analyst, it is obvious that stock markets continue to move in the same some variations, however, in the sense that some stock markets appear more correlated with each other

direction in different countries. There are some variations, however, in the sense that some stock than others [13]. Although globalization brings many significant economic advantages, it also plays

markets appear more correlated with each other than others [13]. Although globalization brings an important role during infectious global crises [14]. The planet has recently been hit by increasing

many significant economic advantages, it also plays an important role during infectious global crises [14]. The planet has recently been hit by increasing numbers of infectious diseases such as Crimean Congo hemorrhagic fever, Ebola virus, MERS CoV, SARS, Lassa fever, Nipah Virus, avian flu, Rift

Int. J. Environ. Res. Public Health 2020, 17, 2800 3 of 19

numbers of infectious diseases such as Crimean Congo hemorrhagic fever, Ebola virus, MERS CoV, SARS, Lassa fever, Nipah Virus, avian flu, Rift Valley fever, Zika virus. The spread of contagious disease not only affects peoples health and lives but also induces a decline in economic growth.

Explaining why market participants make decisions contrary to rational market participants assumptions is one of the central issues in the behavioral finance studies. There are major challenges of COVID-19 to personal lives, including lockdowns (or lockdown-like situations) for a large number of people. Besides the extreme occurrences of death and disease, many people across the globe are panicking because of this fast-spreading infectious disease. Such external and unexpected shocks can bring down economic trends and suddenly change investors sentiments. Kaplanski and Levy [15] suggest that investment decisions can be affected by bad mood and anxiety and that anxious individuals may be more pessimistic about future returns and therefore tend to take fewer risks. Anxiety creates a negative feeling which can impact investment decisions and the subsequent returns on assets.

The unusual situation developed by COVID-19 offers us an opportunity to assess the pandemics impact on the stock markets of affected nations due to an unforeseen and feared disease. In this paper, we discuss the effect of COVID-19 on major affected countries stock markets as measured by their leading stock indices in Japan, Singapore, Korea, Thailand, Indonesia, Russia, Malaysia, the USA and Germany, etc. Due to the short time of the virus outbreak, an event study is conducted to examine the impact of the unexpected outbreak of COVID-19 on stock market indices performances.

The remainder of the paper is organized in the following sections: Section 2 includes the related theoretical and empirical literature, the data and methodology are discussed in Section 3, followed by the empirical evidence in Section 4, and Section 5 includes a conclusion.

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