Market responses to geopolitical risk and economic policy uncertainty: Evidence from Vietnam.

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Tác giả: Phuong Thi-Ha Cao, Duc Hong Vo

Ngôn ngữ: eng

Ký hiệu phân loại: 922.945 *Hindus

Thông tin xuất bản: England : Heliyon , 2025

Mô tả vật lý:

Bộ sưu tập: NCBI

ID: 684064

The Vietnamese stock market has traditionally been affected by local factors. However, little attention has been given to the role of external shocks, such as the geopolitical risk (GPR) and economic policy uncertainty (EPU), from Vietnam's major trade partners. Existing literature suggests that while local factors are well understood, the impact of external shocks on emerging markets such as Vietnam remains underexplored. This study investigates the effects of GPR and EPU from Vietnam's key trade partners on its stock market returns and volatility from 2000 to 2023, using the novel time-varying parameter vector autoregressive (TVP-VAR) frequency connectedness approach. Our findings reveal that EPU has a more significant effect on market volatility than GPR (42.45 per cent versus 18.80 per cent), with a long-term transmission effect for both EPU and GPR on stock returns. However, stock volatility is mainly driven by short-term transmissions. Notably, foreign EPU had a profound impact on Vietnam's stock market during the COVID-19 pandemic, whereas foreign GPR was more influential during the Russo-Ukrainian conflict. These results underscore the importance of considering external shocks when assessing stock market dynamics in Vietnam, offering valuable insights for policymakers and investors on managing risks associated with global uncertainty.
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