The effect of Russia-Ukraine war on stock market linkages beyond its borders: evidence from Latin America

Geesun Lee, Nareth Silva and Jinho Jeong

Applied Economics Letters, 2026, vol. 33, issue 2, 241-252

Abstract: Previous studies have primarily examined the impact of wars on stock markets within their borders. Our study extends this to countries that are not directly involved in the war. Specifically, we employ TVP-VAR connectedness network approach to investigate the impact of the Russia-Ukraine war on stock market linkages in Latin America. We find that there was a marginal increase in stock market linkages in Latin America at the onset of the war. However, they returned to its pre-war levels, implying the resilience of Latin American stock market segmentation to war outside its borders. While this result suggests a potential opportunity for international investors to diversify geopolitical risk, we further find indirect effects of the war on the region through commodity markets, which may limit the diversification benefits. While previous studies suggest that external shocks such as pandemics and wars increase stock market integration, the results in this study show that they do not have uniform effects on stock market integration. Instead, our study highlights the importance of commodity markets in the investigation of stock market integration.

Date: 2026
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DOI: 10.1080/13504851.2024.2364015

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