Work

Investor herds and oil prices evidence in the Gulf Cooperation Council (GCC) equity markets

Year: 2017

Type: article

Abstract: This paper scrutinizes the effect of crude oil prices on herd behavior among investors in the Gulf Cooperation Council (GCC) stock markets. Using firm level data from Saudi Arabia, Qatar, Oman, Kuwait, Bahrain, Dubai and Abu Dhabi stock exchanges, we examine equity return dispersions within industry portfolios and test whether investor herds exist in these markets. We then assess whether crude oil price movements have any effect on the investment behavior of traders in the aforementioned markets. Our findings reveal significant evidence supporting herd behavior in all GCC equity markets with the exception of Oman and Qatar, more consistently during periods of market losses. Furthermore, we find significant oil price effects on herd behavior in these markets, particularly during periods of extreme positive changes in the price of oil. Our findings suggest that investors’ tendency to act as a herd in the said markets is significantly affected by the developments in the oil market.

Source: Central Bank Review

DOI: 10.1016/j.cbrev.2017.08.001

Authors: Talat Ulussever, Rıza Demirer

Institutions: King Fahd University of Petroleum and Minerals, Southern Illinois University Edwardsville

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,200

Funder: King Fahd University of Petroleum and Minerals