WILL COVID-19 PANDEMIC ALIGN STOCK RETURNS TO GDP GROWTH IN KENYA?

Many countries are experiencing slow economic growth and reduced activity at the stock market. Stock markets always provide the vital role of acting as a leading indicator for economic growth. Even though there is no consensus on whether the two variables are positively or negatively correlated from previous studies, there is unanimity to the fact that stock market returns greatly affect economic growth of a country like Kenya.

This review offers an intensive and extensive literature review of how stock market returns will correlate to economic growth in this period and factors that might influence the resultant behavior. The review also investigates whether factors Kenyan Stock returns are going to be aligned to the GDP influenced by factors such as foreign investments, disposable income, dominant stocks and investor sentiments.

This review established that the growth in Kenya's GDP, like that of many countries, will follow stock market returns in slowing down in response to the pandemic. This is attributed to reduced propensity to invest caused by reduced disposable income job losses and negative investor sentiments. The study advices stakeholders to pay keen attention to the Kenyan stock market returns in order to project economic growth if the market is devoid of interferences. The government is urged to cushion businesses and employers from the harsh economic tides in order to avail disposable income to as many people as possible who will in turn invest in stocks.