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Oil Prices and the Kuwaiti and the Saudi Stock Markets:The Contrast

Author

Listed:
  • Samih Antoine Azar

    (Haigazian University, Mexique Street, Kantari, Beirut, Lebanon)

  • Loucine Basmajian

    (Printkom, Mar Mikhael, Beirut, Lebanon)

Abstract

The purpose of this paper is to test the impact of oil price shocks on the stock markets of the two biggest and most liquid GCC equity markets, those of Kuwait and Saudi Arabia. It is expected that the two stock markets react similarly to oil price shocks. Actually the results show heterogeneity in responses. While there is prima facie evidence that both stock markets are influenced positively and linearly by oil price shocks, this evidence disappears when additional variables are added to the regressions. With the larger specification oil price shocks do not impact, neither linearly or non-linearly, Kuwaiti stock markets. By contrast Saudi markets react non-linearly to both oil price shocks and shocks in the US S&P 500. The only common feature for both equity markets is the positive relation with the shocks in the US S&P 500.

Suggested Citation

  • Samih Antoine Azar & Loucine Basmajian, 2013. "Oil Prices and the Kuwaiti and the Saudi Stock Markets:The Contrast," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 294-304.
    • Handle: RePEc:eco:journ1:2013-02-3
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    Citations

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    Cited by:

    1. Mohammad I. Elian & Khalid M. Kisswani, 2018. "Oil price changes and stock market returns: cointegration evidence from emerging market," Economic Change and Restructuring, Springer, vol. 51(4), pages 317-337, November.
    2. Abdul Rahman, 2020. "Long run Association of Stock Prices and Crude Oil Prices: Evidence from Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 124-131.
    3. Abdou, Hussein A. & Elamer, Ahmed A. & Abedin, Mohammad Zoynul & Ibrahim, Bassam A., 2024. "The impact of oil and global markets on Saudi stock market predictability: A machine learning approach," Energy Economics, Elsevier, vol. 132(C).
    4. Mesfer Mahdi Al Mesfer Al Ajmi, 2024. "Impact Of Oil Prices On Boursa Kuwait," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 12(1), pages 21-29.
    5. Shabbir Ahmad, 2019. "The Impact of Oil Price Uncertainty on Stock Returns in Gulf Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 447-452.

    More about this item

    Keywords

    Oil prices; stock markets; Kuwait and Saudi Arabia; US S&P 500; GARCH; non linear relations;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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