IMPACT OF THE RUSSIA-UKRAINE CRISIS ON FOOD INFLATION AND STOCK MARKETS IN ASIAN ECONOMIES: WITH REFERENCE TO INDIA, CHINA, JAPAN AND THAILAND

Abstract

The current geopolitical risk posed by the Russia-Ukraine war has significant implications on the stock markets and the commodities markets of several countries. Using monthly data from October 2020 to the present time period, we analyse the impact of Russia-Ukraine crisis on food inflation and stock market return volatility in the context of Asian countries, namely, India, China, Japan and Thailand with the help of regression analysis based on the OLS technique. Our main findings show us the impact of the Russia-Ukraine war on the food inflation to be visible in China and Japan whereas the war's effect on the stock markets of all the countries selected is shown to be insignificant. We observe the highest and lowest monthly food inflation in China, the highest monthly stock return volatility in Thailand and the lowest monthly stock return volatility in Japan among the selected countries. For the case of India, the war doesn't have much effect on its food inflation and stock market return volatility. We suggest reducing food import dependency by strengthening domestic production and going for alternative food suppliers so as to not be affected by the international food prices that are subjected to the turmoil of war. It is imperative to re-diversify portfolios based on the volatility trend of stock market returns in order to shield oneself from the perils of stock market volatility caused by wars.