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Research Article Open access CC BY 3.0

The Impact of Arab Spring on Stock Market Performance

Hisham Handal Abdelbaki

Journal of Economics, Management and Trade · pp. 169–185 · Published 10 May 2013

10.9734/BJEMT/2013/3768

Abstract

No doubt that the revolutions of the Arab Spring in Tunisia, Egypt, Libya, Yemen and Syria affect macroeconomic variables and stock markets in the national economy. The revolution in Egypt began by a series of popular movements on Tuesday, January 25, 2011. This paper investigates the impact of political instability, economic instability and external events associated with the Egyptian revolution that started on 25th January, 2011 on the stock market performance. The findings state the correlation between the number of participants sit-in protests, number of participants sit-in factional demands and exchange rate between the Egyptian pound and US$ and the main stock market indexes, EGX30 and EGX70. To achieve the objectives of this paper, the author employ the recently developed techniques of time series data cointegration; Vector Error Correction Model (VECM). The empirical investigations start by examining the basic series properties to the data: structural break, stationarity, cointegration, then constructing the VEC model. The results lend support to the view that political instability plays an important role in effecting the stock markets’ function. However, economic instability came in the second rank.

Arab spring stock market performance vector error correction model (VECM) Egypt

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