US Economic Policy Uncertainty and GCC Stock Market

Abstract

This study contributes to the scant finance literature on emerging countries by examining the relationship between economic policy uncertainty and monthly indices of Gulf Cooperation Council (GCC) stock markets during the period of July 2004 to August 2018. Both U.S. and global economic policy uncertainties exert significant and negative long run influence on stock prices in Bahrain and Kuwait. The impact of U.S. economic policy risk, however, is relatively stronger. Other stock markets in the GCC region, on the other hand, are not affected by U.S. and global economic policy uncertainty. These markets present a sound alternative for international portfolio diversification when the global economic policy uncertainty is on the rise.