AFRICA'S ENERGY DILEMMA: UNVEILING THE NEXUS BETWEEN OIL PRICE SHOCKS AND STOCK MARKET PERFORMANCE IN SELECTED OIL-RICH NATIONS

Abstract

This study examines the relationship between oil shocks and stock market performance in Nigeria, Egypt, South Africa, and Tunisia. The data covered the period from Q1:2010 to Q4:2020. Using a Panel ARDL approach, the analysis reveals significant findings. Oil price shocks negatively impact stock market performance in the long run, emphasizing the vulnerability of these economies to oil price fluctuations. A positive long-run relationship is observed between exchange rates and stock market performance, while inflation rate shocks have a negative effect. The study highlights the importance of prompt adjustments in stock markets and proactive policies to mitigate the impact of oil shocks. Policymakers should focus on diversification, effective exchange rate management, and inflation control to ensure sustainable economic growth and maximize the benefits of oil wealth. These findings have important implications for policymakers, investors, and market participants in oil-rich African economies.