Analysing COVID-19′s impact: Gold, oil, and stock markets in African oil-exporting economies

Abstract

This article employs quantile regressions to investigate the link between oil prices, gold prices, and stock market returns in five African oil-exporting nations: Nigeria, Ghana, Egypt, Algeria, and Tunisia. The analysis utilises daily data spanning from January 1, 2017, through September 30, 2021. Before the onset of COVID-19, oil played a pivotal role as a hedge in Tunisia, Egypt, Algeria, and Ghana, providing stability in both normal and bullish market conditions. Furthermore, it functioned as a diversifier in Egypt and Ghana during bearish market phases. However, as the pandemic unfolded, oil took on the characteristics of a safe haven in Egypt, Ghana, Nigeria, Algeria, and Tunisia, particularly notable during bearish and normal market conditions. Gold, prior to the pandemic, served as a hedge in Egypt, Ghana, Nigeria, and Tunisia, while also acting as a diversifier across both bearish and bullish market conditions in these economies. Conversely, during the pandemic, gold predominantly functioned as a diversifier in most oil-exporting African economies, with significant hedge properties observed specifically in Algeria and Ghana. The practical implications of these findings are significant for various stakeholders, including oil exploration and production firms, businesses in the transport and hospitality sectors, policymakers, and investors with stocks sensitive to oil and gold prices.

Keywords

• Oil-exporting
• COVID-19
• Quantile regressions
• Stock markets
• Hedge
• Safe haven