Indonesian Islamic Stock Returns Performance in the Time of the COVID-19 Outbreak

Abstract

The purpose of this research is to compare Indonesia’s Islamic stock index before and during COVID-19. The paper traces the impact of the market crash on Indonesia’s Islamic equity investment. Given the rising concern of the performance of Islamic equity returns, the findings in this paper are useful for investors interested in stock return performance and Shariah-compliant assets. To investigate the differences in daily equity returns of Indonesian Islamic stocks during the COVID-19 pandemic market crash, we applied a one-sample paired t-test using Stata. Data collection and analysis were conducted quantitatively. We obtained daily stock prices and converted them into daily returns, which were used for financial returns prior to and during the COVID-19 financial market crash. The results showed no significant differences before and during the market crash, indicating that the Indonesian Islamic stock does not react significantly to the COVID-19 market crash. Therefore, the impact of the market crash during the COVID-19 outbreak on the performance of the stock returns does not apply to the Indonesian Islamic stock index. Performance measurement is one of the major concerns for investors in Islamic capital markets. Given the rising concern of equity assets in Islamic finance in general and in the performance of Islamic equity returns in particular, the findings in this paper are useful for investors interested in stock return performance and Shariah-compliant assets. This paper contributes to assessing Islamic financial assets under the financial market crisis, as this research mainly focused on the short-term analysis before and during the COVID-19 market crash. The Islamic financial market growth has been severely impacted during the observed period due to COVID-19 lockdowns.

Keywords: Islamic index, stock performance, COVID-19.