Abstract:
The present study investigates the changes in G20 stock market dynamics and their interlinkages in
the aftermath of COVID-19. It utilizes the Detrended Cross-Correlation Analysis (DCCA) along with
the network and complexity theories for detecting the contagion effect of the pandemic on the
stock markets. We find that both advanced and emerging stock markets, departing from their pre crisis structures, form a tightly coupled close community after the disease outbreak – except for
China that distanced itself from the rest of the cohort. This indicates that COVID-19 has caused
contagion in the global equity market, which has increased the risk to international portfolio
diversification benefits. The adoption of the Network theory for contagion detection technique
augments the detailed understanding of the structural changes and their interlinkages among the
stock markets in a more comprehensive way.