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Recent Evidence on the Oil Price Shocks on Gulf Cooperation Council Stock Markets

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  • Victor S.H. Wong
  • Suzanna El Massah

Abstract

The recent plunge in the price of oil affected many countries, especially major oil producers and exporters, such as the Gulf Cooperation Council (GCC), which accounts for half of the global oil reserves. This paper examines the impact of oil price changes on GCC stock markets, including Bahrain, Kuwait, Oman, Qatar, Kingdom of Saudi Arabia, and United Arab Emirates over a 10-year period, 2005–2015. We examine the direction of influence and influence absorption through Granger causality and impulse response function. The results are important for portfolio management at the international level, and provide insights for government and regulatory authorities in times of oil price change. Additionally, the evidence suggests the need for more economic diversification at the country level in the GCC region to mitigate high volatility in the event of oil shocks.

Suggested Citation

  • Victor S.H. Wong & Suzanna El Massah, 2018. "Recent Evidence on the Oil Price Shocks on Gulf Cooperation Council Stock Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 25(2), pages 297-312, May.
    • Handle: RePEc:taf:ijecbs:v:25:y:2018:i:2:p:297-312
    DOI: 10.1080/13571516.2017.1379216
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    Cited by:

    1. Onour , Ibrahim A., 2021. "Modeling and assessing systematic risk in stock markets in major oil exporting countries," Economic Consultant, Roman I. Ostapenko, vol. 35(3), pages 18-29.
    2. Imed Medhioub & Mustapha Chaffai, 2021. "Herding behaviour theory and oil price dispersion: a sectoral analysis of the Gulf Cooperation Council stock market," Journal of Asset Management, Palgrave Macmillan, vol. 22(1), pages 43-50, February.
    3. Xuluo Yin & Jiangang Peng & Tian Tang, 2018. "Improving the Forecasting Accuracy of Crude Oil Prices," Sustainability, MDPI, vol. 10(2), pages 1-9, February.
    4. Muhammad Ali, Khalid M. Iraqi, Abdul Waheed Khan, 2019. "Impact of Oil Prices on Stock Market Performance: Evidence from Top Oil Importing Countries," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 4(2), pages 1-14, October.
    5. Alqahtani, Abdullah & Klein, Tony, 2021. "Oil price changes, uncertainty, and geopolitical risks: On the resilience of GCC countries to global tensions," Energy, Elsevier, vol. 236(C).
    6. Yasir Alsaedi & Gurudeo Anand Tularam & Victor Wong, 2020. "Impact of Solar and Wind Prices on the Integrated Global Electricity Spot and Options Markets: A Time Series Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 337-353.

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