HEALTHCARE STOCKS. DEFENSIVE OR SPECULATIVE? EVIDENCE FROM DEVELOPED AND EMERGING MARKETS

Abstract

Sector rotation identifies the market condition and rebalances the portfolio according to the sustainability of the sectors. During the economy's slowdown, healthcare stocks have always been acknowledged as a component of a diversified portfolio as its features represent a defensive investment. However, is this still applicable during a major crisis like the Covid-19 pandemic? This study aims to examine whether the performance of healthcare stocks can sustain during the current pandemic. This study observed the performance of healthcare indices for the USA, France, Germany, China, India and Malaysia during the year 2020. Employing ARDL and non-linear ARDL, we found that the healthcare stocks of stock exchanges such as the USA, Germany, China and India are still the right candidates to diversify portfolio risk but not for France and Malaysia.