IMPACT OF OIL PRICES ON BOURSA KUWAIT

Mesfer Mahdi Al Mesfer Al Ajmi ()
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Mesfer Mahdi Al Mesfer Al Ajmi: College of Business Studies, Public Authority for Applied Education and Training, Kuwait

Eurasian Journal of Economics and Finance, 2024, vol. 12, issue 1, 21-29

Abstract: Given Kuwait’s economic dependency on oil exports, analyzing the effects of oil prices fluctuations on the emerging Boursa Kuwait is crucial. The main purpose of this study is to investigate the long-run and short-run relationships between Kuwait’s oil prices and Boursa Kuwait’s performance utilizing recent data of the premier index, which was established in 2018. After applying the stationarity tests on the daily data from 2018 to 2022, the empirical Johansen’s cointegration method revealed the absence of long-run relationship between oil prices and stock market returns when an optimal lag two of the Schwarz information criterion was used. In the short term, the autoregressive model showed that oil prices’ past lag can predict the Kuwait’s oil prices and premier index, whereas the past lag values of the premier index can predict the premier index but not oil prices. The vector autoregressive coefficients in the short-run findings is that the capital market policymakers may need to revise their financial strategies by observing Kuwait’s oil production, which affects the economy and the performance of the listed companies in Boursa Kuwait. Moreover, portfolio managers may need to revise their hedging investment policies based on the effect of oil prices.

Keywords: Oil Prices; Bourse Kuwait; Premier Index; Index Prices; Cointegration; VAR (search for similar items in EconPapers)
Date: 2024
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