Energy Market Dynamics and Emerging Equity Markets: Insights from A Wavelet-Based Time–Frequency Analysis
Year: 2025
Type: article
Abstract: This study explores the dynamic, time-frequency relationship between international natural gas prices and the equity markets of 23 emerging economies across the APAC, EMEA, and Americas regions. Using wavelet coherence analysis, the research examines how market interactions evolve across different time horizons, with a particular focus on major global crises, including the COVID-19 pandemic and the Russia-Ukraine War. The findings reveal a stark bifurcation fundamentally driven by each nation's net energy trade position. For major gas-exporting nations, such as Qatar, Indonesia, and Mexico, a strong in-phase coherence is identified, where natural gas prices act as a positive leading indicator for equity markets, particularly in the medium- to long-term. Conversely, in major gas-importing economies, including China, South Korea, and European nations like Poland, a powerful anti-phase coherence dominates, with gas prices serving as a negative leading indicator, especially in the short- to medium-term. The analysis confirms that geopolitical shocks, particularly the Russia-Ukraine War, significantly amplify these co-movements, solidifying natural gas as a primary channel for financial risk transmission. The study concludes that natural gas plays a strategic financial role, offering predictive insights for risk mitigation and strategic portfolio allocation across emerging markets.
DOI: 10.14419/4cdt1t05
Authors: Sourav Sharma, Dr. Rupinder Katoch
Institution: Lovely Professional University
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Climate action
Open Access status: bronze
OpenAlex ID: W4415992569
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