Risk of decline in share prices of energy and fuel sector on the Warsaw Stock Exchange during the two waves of the COVID-19 pandemic

Purpose: The COVID-19 pandemic is now frequently cited as a factor affecting countries' economies. A decline in the share prices of companies appeared in Poland with each successive wave of the pandemic (3 waves). The aim of our research is to identify the characteristics of companies that influence the fact that their share prices decline below a certain level during the first and second waves of the pandemic. We focus on the energy and fuel companies, due to their high economic importance.

Design/Methodology/Approach: We use the logit model in assessment of the risk of price decline. Share prices of companies listed on the WSE were analysed. A comparison was made of the risk of a decline in the share prices of energy and fuel companies in relation to other companies, and according to stock exchange macrosectors. The research hypotheses are verified by estimating the two models: model (1) for the first wave of the pandemic (I stage) and model (2) for the second wave of the pandemic (II stage).

Findings: The main conclusion of the research is that the first wave of the pandemic caused panic in the stock market. This was a completely new economic disruptor. During the second wave of the pandemic, morbidity and mortality rates were much higher, but the lessons learned beforehand had a dampening effect on stock market reactions.

Practical Implications: A pandemic situation is a specific type of crisis. The analysis shows that the technology macrosector is the least vulnerable to this type of crisis. Teleworking and the use of new communication technologies have influenced the development of this sector. In contrast, the fuel and energy sector is very sensitive to any restrictions on movement.

Originality/Value: A direct comparison of the impact of the two waves of the pandemic on company prices in Poland has not been conducted so far. Particularly important is the inclusion in the analysis of macro-sectors, which made it possible to identify those most exposed to the risk of decline in prices.