The Impact of the Investor Sentiment Index (SMI) on the Malaysian Stock Market during the COVID 19 Pandamic

• Published in: International Journal of Economics and Management
• Main Author: Albada A.; Nizar N.
• Format: Article
• Language: English
• Published: Universiti Putra Malaysia 2022
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85138221316&partnerID=40&md5=2bb411f1cd6d810066375b833ecabaf6

COVID-19 is a highly contagious viral infection that has changed the world, with many human lives being lost. This study aimed to analyse investors' sentiment and stock market behaviour in Malaysia during the COVID-19 pandemic. Stock market performance was measured through the FTSE BURSA 100 Index (T100) from January 29, 2020, until March 31, 2021, by employing principal component analysis (PCA) to construct the investors' Sentiment Index (SMI). The results indicated that the sudden outbreak of COVID-19 and its rapid spread significantly impacted investors' psychology, which disrupted investors' investment decisions. Furthermore, rapid increases in confirmed COVID-19 cases and deaths increased the uncertainty and unpredictability of the country's economic situation. As a result, the Malaysian financial market showed a steep downward trend during the COVID-19 pandemic. © International Journal of Economics and Management