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MENA stock markets decoupling: Winners and losers from the wars in Ukraine and Middle East

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  • Hakim, Sam
  • Neaime, Simon

Abstract

This study investigates whether and to what extent financial markets in MENA countries exhibit structural decoupling from global financial trends in response to geopolitical shocks. Specifically, we test the hypothesis that heightened geopolitical uncertainty accelerates financial differentiation in MENA markets. Using a GARCH-VAR model on monthly data from 2014 to 2024, we identify evolving volatility transmission patterns between MENA and global markets, particularly during key geopolitical episodes. Our results suggest a regionally specific shift toward financial insularity, shaped by both economic and strategic realignments. We note a clear decoupling from historical correlations in the MENA region’s equity markets, with leading countries of that region either completely or partially decoupled. The empirical results indicate that countries in the region are rejecting pressures to take sides, and seeking a new direction by strengthening ties with emerging markets.

Suggested Citation

  • Hakim, Sam & Neaime, Simon, 2026. "MENA stock markets decoupling: Winners and losers from the wars in Ukraine and Middle East," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925004775
    DOI: 10.1016/j.ribaf.2025.103221
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