Climate risk co-movements effect on South Asia’s emerging stock market for financial inclusion
Year: 2025
Type: article
Abstract: Ecological risks and climate change have vulnerable effects on the financial markets. Using wavelet time–frequency analysis, our study explores the interim effect of climate flood-disaster risk co-movements on the South Asian emerging stock market for financial inclusion. We selected the vital stock indexes of the South Asian emerging (Pakistan) stock market during the recent climatic flood-disaster event in June 2022 using a wavelet time–frequency for climate risk co-movement analysis. The Morgan Stanley Capital International (MSCI) Pakistan stock pairs (MSCI-Global X Morgan Stanley Capital International Exchange Traded Fund (GXMSCI-ETF), MSCI-Karachi Meezan Index-30 (KMI), MSCI-Karachi stock exchange (KSE100) index, and pair MSCI-Karachi stock exchange all share (KSE) index risk co-movements significantly lead to higher- and lower-frequency zones during disaster events with coherence values exceeding (0.75) at significance level throughout the (01–105-days) period. Furthermore, all stock pairs are positive, leading to risk co-movements at higher- and lower-frequency zones except the pair MSCI-Frontier Markets Index Series (FTSE) and MSCI-GXMSCI-ETF index during full sample (1–359 days). MSCI-GXMSCI-ETF leads, while MSCI-FTSE lags but is insignificant despite coherence greater than (0.75). However, all selected indices have negative mean returns with KMI (− 0.020926) maximum and FTSE (− 0.179684) minimum values during flood-disaster events. The findings offer novel insights into how natural disasters influence stock market behavior, particularly in emerging economies in South Asia such as Pakistan.
Source: Future Business Journal
Language: English
Subfield: Finance
Domain: Social Sciences
SDG: Climate action
Open Access status: diamond
OpenAlex ID: W4410477287