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Implications of war on the food, beverage, and tobacco industry in South Korea

Author

Listed:
  • Madhusmita Bhadra

    (Yeungnam University)

  • M. Junaid Gul

    (Yeungnam University)

  • Gyu Sang Choi

    (Yeungnam University)

Abstract

The Food, Beverage & Tobacco (F&B) industry is an essential sector in the competitive economy. Procurement of production factors mainly depends on sales forecasting and the supply chain of raw materials. However, the conflict between Russia and Ukraine has jeopardized the global supply chain. As the conflict worsened, the world faced a food crisis, which was already a significant challenge due to the Covid-19 pandemic. Understanding how conflict-related disruptions in global food markets might affect the stock return of the F&B industry of South Korea, this study forecasts the stock returns on the KOSDAQ F&B sector. This paper highlights that the conflict resulted in immediate and far-reaching consequences on the global food supply chain and future crop harvesting in South Korea. As numerous algorithms have been widely used in predicting stock market returns, we use Autoregressive Integrated Moving Average (ARIMA) model for the prediction. Using daily returns from the KOSDAQ F&B industry from January 1999 to October 2022, the study proposes an ARIMA (2,2,3) model to forecast future movements of the stock returns. With an RMSE of 0.012, the prediction performance holds good using the ARIMA model. The results show a negative trend observed in the F&B sector returns for a few months, implying that sector stock returns decline as the conflict between Russia and Ukraine becomes more pronounced. This study also suggests that South Korea has massive scope to stabilize the demand for healthy, safe food, give more attention to domestic agribusiness, and make itself a self-sufficient agri-economy.

Suggested Citation

  • Madhusmita Bhadra & M. Junaid Gul & Gyu Sang Choi, 2023. "Implications of war on the food, beverage, and tobacco industry in South Korea," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
  • Handle: RePEc:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01659-1
    DOI: 10.1057/s41599-023-01659-1
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    References listed on IDEAS

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    1. Mohit Saini & Mahender Yadav & Vaibhav Aggarwal & Manoj Kumar, 2023. "All weather friends: How did the Russia-Ukraine war impact Indian stock markets?," International Journal of Diplomacy and Economy, Inderscience Enterprises Ltd, vol. 9(1), pages 93-111.
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    7. Hudson, Robert & Urquhart, Andrew, 2022. "Naval disasters, world war two and the British stock market," Research in International Business and Finance, Elsevier, vol. 59(C).
    8. Javad T. Firouzjaee & Pouriya Khaliliyan, 2022. "Machine learning model to project the impact of Ukraine crisis," Papers 2203.01738, arXiv.org.
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    Cited by:

    1. Daria Loginova & Stefan Mann, 2024. "Sweet home or battle of the sexes: who dominates food purchasing decisions?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.

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