Iraqi Stock Exchange Reactions to the Oil price, Covid-19 Aftermath, and the Saudi Stock Exchange Movements pre-during Vaccination Program

Abstract

The study attempts to understand the influence of Brent oil price per barrel (BOP), the general index of 30 stocks in Saudi Arabia (MSCI30), the number of Covid-19 new infected cases (NIC_19), ounce gold price (OGP), and US dollar base to Iraqi Dinar exchange rate (USD_IQD) upon Iraq stock exchange (ISX60) using the daily period (25 February 2020 to 15 July 2021) divided into three subperiod; whole period pre-during covid-19, pre-Covid-19 and during Covid-19 vaccination process. The results indicate the long-run relationship between the regressors and the Iraq stock exchange in the subperiod before Covid-19 and during the Covid-19 vaccination process but did not appear for the whole period pre-during the covid-19 vaccination process. The results reveal a positive influence of (MSCI30 and USD_IQD) on ISX60 in the long term for a period before the Covid-19 vaccination process. And, the results indicate a negative influence of (BOP and OGP) respectively on (ISX60) in the long term, and (MSCI30) positively leads ISX60 in the long term during the Covid-19 vaccination process. The results are crucial to governments, investors, and policymakers because the Iraqi economic movements and stock exchange development need more highlight in the further studies, especially the vaccine discovery consequences.

Oil Exports, Political Issues, and Stock Market Nexus

“…According to the Arbitrage Pricing Theory, not only one factor affects the financial market but many factors (Mustafa, 2020); several studies tested and highlighted the theory in developed and developing stock markets and are still exceptional cases of interest to scholars or researchers like economic factors, political events, energy prices, financial crisis, Arab spring, wars, global healthcare disease such as a covid-19 pandemic (Missaoui et al, 2018;Abuoliem et al, 2019;Asaad, 2021;Asaad and Al-Delawi, 2022). However, researchers do not have a consensus on energy production, political issue, economic factors, and the stock market nexus (Ali et al, 2020;Shabbir et al, 2020;Nguyen et al, 2020).…”

“…The Covid-19 pandemic, after spread clearly at the beginning of (2020) led to an inverse effect on the financial market and economic activities, particularly after the Covid-19 new cases increased (Ashraf, 2020;Aslam et al, 2020;Bahrini and Filfilan, 2020;Devpura, 2021;Hatmanu and Cautisanu, 2021;Kyriazis, 2021;Nwosa, 2021;Yilmazkuday, 2021;Yousfi et al, 2021). On the contrary, the Covid-19 vaccine discovery led to reducing economic uncertainty and international financial markets volatility (Demir et al, 2021;Rouatbi et al, 2021;Apergis et al, 2022;Asaad and Al-Delawi, 2022;Nguyen et al, 2022;Unal et al, 2022). Besides, the developed stock markets are more sensitive to the Covid-19 pandemic than the emerging stock market (Salisu et al, 2020).…”

“…Fourth, most of the past studies on the stock market in the MENA or GCC region excluded the Iraq stock exchange; therefore, more single-country studies on this market are needed. Fourth, no studies mention the influence of the covid-19, ISIS, or election on the Iraq stock exchange (Asaad and Marane, 2020a;Asaad, 2021;Asaad and Al-Delawi, 2022). Because of that, the study is different from others due to the lack of investigation on developing countries or oil-exporting countries like Iraq during the period of 2004 to 2021, which faced many local and global fluctuations, oil price volatility, financial crisis, Covid-19, increasing terrorism activities, Arab spring, wars and internal conflict, where stock market responded adversely to all these factors.…”

“…Most researchers focused on the effect of the pandemic on the stock market indicators and economic activities in the short and long term (Aslam et al, 2020;Bahrini and Filfilan, 2020;Devpura, 2021;Hatmanu and Cautisanu, 2021;Kyriazis, 2021;Nwosa, 2021;Yilmazkuday, 2021). Although nevertheless, the Covid-19 outbreak would probably continue with a negative effect on financial markets if the vaccination process did not start by the public people in March 2021 (Alkayed et al, 2022;Asaad and Al-Delawi, 2022). The vaccine discovery led to the ending of the unexpected government procedure (Rouatbi et al, 2021;Apergis et al, 2022) and decreased the uncertainty of economics (Unal et al, 2022).…”

“…Despite a substantial and driving development in the Iraq stock exchange, the electronic trading system increases the liquidity and diversification of traded tools (Kaehler et al, 2014;Abdel-Hakim and Dalloul, 2016). Meanwhile, Iraq faces several challenges as an oil-exporting or developing country, such as economic conditions, political events, energy prices, financial crisis, Arab spring, wars, and global diseases like the covid-19 pandemic (Alwan et al, 2013;Missaoui et al, 2018;Asaad, 2021;Asaad and Al-Delawi, 2022). For instance, researchers have no consensus yet on energy production, political issue, economic factors, and the stock market nexus (Ali et al, 2020;Shabbir et al, 2020;Nguyen et al, 2020).…”