The Global Equity Market Reactions of the Oil & Gas Midstream and Marine Shipping Industries to COVID-19: An Entropy Analysis

Mina Nasiri, Hamed Nasiri, Saeid Nasiri, Maliheh Bitarafan, Babak Fazelabdolabadi

Abstract

This article quantifies the information flow between major equities in the Oil & Gas Midstream and Marine Shipping industries, on the basis of the effective transfer entropy methodology. In addition, the article provides the first analysis of the investors` fear and market expectations in these sectors, according to Rényi entropy approach. The period of study was extended over five years, to fully capture the pre/post-COVID situations. The entropy results reveal a major change in the underlying information flow pattern among equities in the Oil & Gas Midstream and Marine Shipping sectors, in the aftermath of COVID-19. According to the new (post-COVID) paradigm, the stocks in the Oil & Gas Midstream and Integrated Freight & Logistics industries have gained momentum in occupying six of the ten positions within the list of most-influencing equities in the market, in terms of information transmission. The disorder and randomness has decreased for over 89% of the studied equities, after virus outbreak. For the equities detected with high information-transmission standing, the Rényi entropy results indicate that investors more likely showed higher level of future expectations and lower level of fear regarding frequent market events, within the post-COVID timeline.

Keywords

Marine Shipping; Logistics; Freight Transportation; COVID-19; Entropy.

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