The Impacts of the Political Factors on the Stock Market Index

Mohamad Youness

(Finance Doctoral School, The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract: This paper examines the impacts of the political factors on the stock market index, taking the Beirut Stock Exchange as a practical case. It shed light on the most important political events and decisions that happened in Lebanon during the period (2017-2020) and linked it directly to the stock market index. This paper depends on the database of BLOM index, where I use the rate of the daily observations of the stock market index to perform empirical tests and regression model to analyze the data and study its correlation. In addition, the political events and news were collected from the National News Agency (NNA). The results show that both negative and positive political events have significant impacts on the BSE returns. Moreover, the magnitude of the impact of negative events appears to be more influential than the impact of positive events. Also, the results of variance show that there are positive and negative impacts of the political events on BSE volatilities. It is obvious that the political events and news have a significant effect on BSE volatility, where it seems that the returns and volatilities of BSE are more sensitive to negative political events than positive political events. Finally, the results show that political events and news affect the stock market index at different levels especially in the short run which in turn affects the performance of the stock market exchange.

Key words: stock market index, beirut stock exchange, political factors, political events

JEL codes: G10, G14, G15, G18