How and What Influences from COVID-19 Have Impacted Stock Prices and Exchange Rates? the Case of Japan

Abstract

This study reports the empirical analyzes of the COVID-19 on stock prices and exchange rates of Japan. Newly confirmed cases and death cases have significantly positive impacts on Japanese stock prices. One reason is that Japanese stock prices recently move together with U.S. stock prices. Under this situation, the U.S. could recover from the damage of COVID-19 ahead of other countries and its stock prices have increased hugely, so the effects on Japanese stock prices have been quite large. The rising of the U.S. stock prices have had a big influence so as to deny the adverse effects by COVID-19 in Japan. The other reason is that although the stock prices of tourism, food service, and so on were damaged in Japan, other industry stock prices have been increasing. The coefficients of declaration of the state of emergency/anti-infection measures are positive which denotes that the stock market may have taken the measure favorably. However, they are positive, but they are also insignificant. For the exchange rates, the newly confirmed case is significant and positive which means that it promotes depreciation of the Japanese Yen. It seems natural because if the situation of COVID-19 becomes serious, market participants consider investment in Japan as risky. Finally, both of the cases of confirmed cases and death cases of COVID-19 are negatively and significantly related with the flow of people. The coefficient of declaration of the state of emergency/anti-infection measures is negative, however, they are not significant to the flow of people.