The 2020 global stock market crash: Endogenous or exogenous?

Starting on February 20, 2020, the global stock markets began to suffer worst decline since Great Recession in 2008, and COVID-19 has been widely blamed market crashes. In this study, we applied log-periodic power law singularity (LPPLS) methodology based multilevel time series unravel underlying mechanisms of 2020 crash by analyzing trajectories 10 major world indexes from both developed emergent markets, including S&P 500, DJIA, NASDAQ United State, FTSE Kingdom, DAX Germany, NIKKEI Japan, CSI 300 China, HSI Hong Kong, BSESN India, BOVESPA Brazil. order effectively distinguish between endogenous exogenous market, proposed using LPPLS confidence indicator as a classification proxy. The results show that apparent bubble patterns super-exponential increase, corrected accelerating logarithm-periodic oscillations, have indeed presented price seven indexes: NASDAQ, DAX, 300, BSESN, BOVESPA, indicating large positive bubbles formed endogenously prior crash, subsequent crashes for are endogenous, stemming increasingly systemic instability inherently, while well-known external shocks, such pandemic, corporate debt bubble, Russia–Saudi Arabia oil war, only served sparks during crash. contrast, three remaining FTSE, NIKKEI, HSI, hence perhaps truly due pandemic. We also found terms regime changes no obvious negative pattern observed indexes, bear bull late March exogenous, factors. unprecedented economy rescue efforts federal reserves central banks across unison may played critical role quelling nick time. This paper creates paradigm future studies real-time detection mechanism dissection. It serves warn us imminent risks not but other financial economic indexes.