Performance and Volatility of Oil and Gas Stocks: A Comparative Study on Selected O&amp;G Companies

Shaharudin, Roselee Shah; Samad, Fazilah Abdul; Bhat, Sonal

doi:10.5539/ibr.v2n4p87

Cited by 12 publications

(10 citation statements)

References 29 publications

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“…The finding of this study contradicts the finding of Hsing ( 2004) when he uses a structural VAR model that allows for the simultaneous determination of company fundamentals found that an inverse relationship exists between company fundamentals and stock price. The study further attests to the findings of Rentschler (2013), Lahiani and Nguyen (2011) and, Shaharudin, Samad, and Bhat (2009 where they find that oil price moderates the influence of company fundamentals on stock price movements.…”

Section: Discussionsupporting

confidence: 81%

“…Basher and Sadorsky (2006) investigate the relationship between the oil price risk and stock market returns in 21 emerging stock markets and find strong evidence that oil price risk impacts stock prices in emerging markets. Shaharudin, Samad, and Bhat (2009) examine the effect of oil price movements on the stock price of oil and gas companies in the Us, India, and the UK. The study revealed the existence of a significant short-run and long-run relationship between oil prices and the oil stock.…”

Section: Review Of Related Literature and Theoretical Frameworkmentioning

confidence: 99%

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Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE)

Musa

2020

jrems

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This study analyzed company fundamentals on how it relates and predict stock price movements and the extent of the role of oil prices in moderating the influence of these company fundamentals in stock price movements. The study covered the period of 2014 to 2018. The study is a panel study. A total of 132 companies were sampled from 196 companies listed on the Nigerian Stock Exchange (NSE) as of December 2018. Data were collected from a secondary source. Multiple linear regression models were used to analyze the data. The study found that a relationship exists between selected companies' fundamentals and stock prices, and oil prices moderate the relationship. But EPS and Working Capital have high predictive power on stock price movements but moderating with oil prices the influence reduces significantly. The study recommends among others that Managers of companies in Nigeria should formulate policies and exert effort geared towards improving company fundamentals in the event of oil prices increases.

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Section: Discussionsupporting

confidence: 81%

Section: Review Of Related Literature and Theoretical Frameworkmentioning

confidence: 99%

Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE)

Musa

2020

jrems

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“…By applying multifactor static and dynamic models, their results suggested that oil prices were an important determinant of returns in the banking, energy, materials, retailing and transportation industries. Shaharudin et al (2009) examined the effect of oil prices movements on the stock price of Oil and Gas companies in the United States, India and the United Kingdom markets over the period of 2003-2008. Using daily data, the results suggested that there existed significant short run and long run relationship between oil price and the oil stocks including the effect of the other variables such as interest rate and the stock index.…”

Section: (Ii) Energy Prices and Industry Stock Returnsmentioning

confidence: 99%

“…(4) Total exports (5) Export of Petroleum and gas (6) % Share of (5) of total export (7) Total imports (8) Imports of chemicals, basic manufacture, machinery and transport equipment (9) % Share of (8) While past studies (which focus on the Unites States, the United Kingdom, Canada, Eurozone, OECD and five oil-rich countries (Bahrain, Oman, Kuwait, Saudi Arabia, and the UAE)) have provided some evidence that energy prices (particularly oil prices) impact stock returns across industries (Oberndorfer, 2009;McSweeney & Worthington;Eryiğit, 2009;Sadorsky, 2001;Shaharudin et al, 2009;Boyer & Filion, 2007;El-Sharif et al, 2005), to the best of our knowledge, no recent work is known in the Iranian context. Our study provides insights regarding information transmission from oil and gas prices to Iran's industry equity returns.…”

Section: Introductionmentioning

confidence: 98%

The Effect of Energy Prices on Iranian Industry Stock Returns

Ghoilpour¹

2011

Review of Middle East Economics and Finance

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While previous studies have provided some evidence that energy prices have impact on stock returns across industries, to the best of our knowledge, it is surprising that no recent work is known about the Iran's emerging stock market. However, the published daily data on Tehran's industry stock indices since 2005 make such a study possible. Therefore, our study is considered very beneficial as it provides insights regarding information transmission and volatility estimation of oil and gas prices and Iranian industry equity returns. The purpose of this study is to examine the effect of oil and gas prices on Iranian industry stock returns. To this end, we analyze 35 Iranian industry indices for the period from January 2005 to March 2010. Based on the multifactor model and using time-series regressions, our findings indicate that oil prices are an important determinant of returns in the banks, credit and other financial institutions, basic metals, electric machinery and apparatus and refined petroleum products and nuclear fuel industries. The findings also suggest that gas price movements do not seem to play a role for Iranian industry stock returns except for motor vehicles and auto parts industry. Moreover, consistent with the capital asset pricing model (CAPM), the market portfolio is a significant pricing factor in most of the (studied) industry stock returns. The results of this study help domestic and potential foreign investors to understand the effect of energy price changes on Iranian industry stock returns in order to manage their portfolios effectively.

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“…He observed that stock prices in South Africa move in opposite direction in response to oil price shocks and speculative demand shocks in South Africa, further affirming that South Africa's stock returns reacted differently to international oil price shocks, depending on the underlying causes of the increase in the international oil prices. Shaharudin, Samad and Bhat (2009) also opined that oil prices affect company's earnings which in turn affect their dividends, retained earnings and the prices of stocks. In their studies carried out on the effect of oil price movement on the stock prices of three different markets (US, India and UK).…”

Section: Literature Reviewmentioning

confidence: 99%

Effect of Volatility Transmission on Domestic Stock Returns: Evidence from Nigeria

Riman¹,

Offiong²,

Egbe³

2014

JIBE

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This study utilizes the structural unrestricted vector auto-regressive (SVAR) model to examine the intertwining relationship between oil price volatility and S&P 500 returns on stock returns in Nigeria.The stochastic properties of the series considered in the model were analyzed using the sensitivity and innovation criteria. The result from this study confirms that US inflationary spillover exert a negative impact on the domestic market in Nigeria. Economic downturn arising from dwindling foreign global economic activity raises uncertainty about the stability of the markets and thus increases stock market volatility. This research has two important connotations. First, that domestic stock returns are vulnerably exposed to volatility from inflationary spillover and energy prices and secondly, international portfolio diversification and trading decision by foreign investors into the local markets could result in decrease stock returns if proper effective hedging strategies are not adopted, particularly, during crisis periods.

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Performance and Volatility of Oil and Gas Stocks: A Comparative Study on Selected O&G Companies

Cited by 12 publications

References 29 publications

Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE)

Company fundamentals and stock price movements: The role of crude oil prices – Evidence from Nigerian Stock Exchange (NSE)

The Effect of Energy Prices on Iranian Industry Stock Returns

Effect of Volatility Transmission on Domestic Stock Returns: Evidence from Nigeria

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