Asymmetric Impact of Russia–Ukraine War on Global Stock Markets

Abstract

Russia’s invasion of Ukraine on February 24, 2022, emerged as Europe’s most significant military conflict post second world war, with global economic and geopolitical consequences. Using a broad (95-country) sample, the study examines the impact of the Russia–Ukraine war on global stock markets surrounding the war announcement. It applied the event study method and used short and long event windows to examine the war’s immediate and intermediate impacts. Global stock markets delivered negative 1.90% abnormal returns on the day of the war announcement, and Russia saw the biggest fall. However, after the initial adverse reaction, stock markets reacted asymmetrically. Stock markets of the countries in geographic proximity and high trade intensity with Russia and Ukraine, and net importers of energy and food grains negatively reacted more than the rest. The regional results show that Asia Pacific and Europe reported negative returns across event windows. In contrast, the Americas, Africa, and the Middle East did not react negatively, even in the shortest event window. Adverse war reactions moderated over time. Equity investors and portfolio managers who aim to protect their investments should buy stocks in countries that are net exporters of commodities made in war-torn countries and switch to stock markets geographically far from the war zone.