STOCK MARKET AS AN INDICATOR OF MARITIME TRANSPORT DEMAND: AN EVIDENCE FROM TURKEY AND ISTFIX REGION

Abstract

The aim of this study is to determine asymmetric causal relationship between Turkish economy and freight rates in the ISTFIX region by separating the positive and negative shocks in the variables. Therefore, asymmetric causality test developed by Hatemi-J is used. Unlike other studies, some stock market variables in Turkey are selected as economic indicators and included in the analysis. Selected stock market variables are BIST 100, BIST Industrial and BIST Transportation indices. The data set used in the study consists of 558 observations on a weekly basis covering the dates between 1st January 2018 and 10th September 2018. As a result of the study, while causal relationships are expected between both negative and positive shocks, only negative shocks in all three stock exchanges are found to cause negative shocks in the ISTFIX index. This results suggest that negative news in the economy is felt directly in the maritime market, but the impact of positive news is not immediately reflected. Furthermore, it is thought that the producers refrain from ordering more raw materials when they encounter negative shocks in the market and negatively affect the demand for sea transportation, which also causes to decrease in the freight rates. These results also indicate that the stock values in Turkey may be a leading indicator for the freight market in the ISTFIX region.