The Impact of COVID-19 on Agriculture Industry in U.S Stock Market

Abstract

Under the impact of the global outbreak of COVID-19, macroeconomic fluctuations have different degrees of effects on various industries. The outbreak of the new crown pneumonia epidemic has caused another negative impact on the already weak global economy. This paper analyzes the changes of American agricultural industry to explore the impact of this basic industry based on Fama French five factor model. This study selects the data from 2019.5.1 to 2020.2.28 as the data before the COVID-19 and 2020.3.1 to 2020.12.31 as the data after the appearance of COVID-19 in the U.S. The significance of five factors and the change of beta in 10 months before and after the epidemic are compared by multiple linear regression. According to the results, the market factor MKT of the agricultural industry did not change much, which was still less than 1. The market value factor SMB of the agricultural industry has changed from significant to insignificant. As for t-Stat of HML factor changed from 0.61 to 3.88, which turned to be significant during COVID-19. Moreover, RMW and CMA stayed redundant. Based on the analysis, this paper aims to evaluate the stocks of American agricultural companies suitable for investment in the epidemic stage. These results shed light for a reference of industry analysis and stock investment during the epidemic period.