Consumer Staples Research Articles

Market reactions to the Israel-hamas conflict: A comparative event study of the US and Chinese markets

This study examines how the US and Chinese markets reacted to the Israel-Hamas conflict using an event study method. The analysis included 2087 firms from China and 1881 firms from the US. The results show differing responses in these markets before and after the conflict was announced. However, some sectors like consumer staples, financials, real estate, and energy had similar reactions, with the energy sector showing a notably strong positive response. These results offer important insights for policymakers, firms, and investors seeking to understand how geopolitical events impact market dynamics.

Navigating crises: Gold's role as a safe haven for U.S. sectors

This paper investigates the correlation between U.S. sectors and gold, and whether gold can serve as a safe haven for investors in specific U.S. sectors during the global financial crisis, COVID-19, and the Russia-Ukraine war. We use data from the Standard & Poor's Depository Receipts (SPDR) Select Sector Exchange Traded Fund (ETF) to capture the performance of the respective sectors. Our findings document that gold is a weak safe haven for most U.S. sectors. Gold is not a safe investment for energy, materials, utilities, and consumer staples. Gold does provide vital protection for financial, consumer discretionary, industrial, technology, and healthcare.

Partisan conflict and stock volatility predictability

ABSTRACT This study investigates the impact of the Partisan Conflict Index (PCI) on stock market volatility within the United States. Results indicate that the PCI is a robust predictor of both in-sample and out-of-sample stock volatility across the aggregate market and most sector-specific markets. Interestingly, the predictive strength of the PCI is pronounced for the aggregate market index and the sectors of utilities, materials, industrials, information technology, energy, telecom services, and consumer discretionary during periods of Republican governance. In contrast, under Democratic governance, the PCI demonstrates significant predictive power in the health care, consumer staples, information technology, and telecom services sectors. These findings contribute novel insights into the stock volatility predictability.

Comparative Analysis of Three Consumer Staples Companies

Comparative Analysis of Three Consumer Staples Companies

Safe haven properties of industrial stocks against ESG in the United States: Portfolio implication for sustainable investments

This study explores the safe haven role of industry sectors classified by the Global Industry Classification Standards (GICS) for global Environmental, Social, and Governance (ESG) stocks in the United States. Our study applies the novel cross-quantilogram and quantile time-frequency connectedness approach for daily time series data from November 2019 to October 2023. Our findings confirm that industry sectors, mainly financials, industrial, communication, information technology, energy, consumer staples, and consumer discretionary, are the safe haven avenues at down, normal, and up market conditions; however, these safe haven avenues vanish for the long-term investment horizon. We also explore the risk spillover patterns for the total time domain and the decomposed spillover level for the short- and long-term spillovers. Our connectedness finding shows that the net transmitters and net receiver patterns are similar for the extreme markets but dramatically change for the normal markets. Finally, based on the portfolio rebalancing strategy, the returns of our portfolio, comprised of industry sectors and the ESG index, outperform the overall market. Moreover, our portfolio yields lower negative returns and a higher Sharpe ratio when compared with the overall market returns. These findings confirm the benefits of diversification by reducing downside portfolio risk. This study is primarily relevant for socially responsible portfolio and risk management investors.

Blackouts and stock markets: Evidence from load-shedding in South Africa

This study examines the impact of an energy crisis (load shedding) on South African sector equity returns and volatilities utilizing daily data and GARCH models. Our findings reveal heterogeneous responses across industries. Basic materials, consumer discretionary, industrial, and telecommunications sectors show resilience, with no significant impact on returns from higher load shedding stages. Consumer staples, financial, technology, and energy sectors exhibit negative relationships between returns and load shedding intensity. Notably, the health sector demonstrates a positive response to elevated load shedding levels. Counter-intuitively we find insignificant or negative impacts on industry volatilities to increased levels of load shedding. Our study contributes to understanding market behaviour under persistent economic stress and has implications for investors and policymakers in emerging markets.

The Impact of Inflation on Institutional Investors' Behaviour in the Indian Stock Market

Inflation has a significant impact on equity markets as it can lead to a reduction in purchasing power and a reduction in real income, which in turn affects the cost of equity. While inflation generally has a negative impact on equity markets, it can have a positive effect in some cases. Investors in the Indian stock market can react to inflation by adapting their investment strategies, including changes in asset allocation, sector rotation, risk management, monitoring central banks ‘activities and adjusting their investment horizon. Institutional Investors (IIs), such as pension funds, insurance companies and mutual funds, may adjust their investment strategies in order to include more inflation-linked assets, such as Treasury Inflation-Protected Securities (TIPS) or inflation-indexed bonds, in order to preserve their purchasing power. In addition, their portfolios can be reallocated to assets less susceptible to the negative effects of inflation, such as equities, gold and real estate. Institutional Investors can also move their investments to sectors that tend to perform well during inflationary periods, such as consumer staples, utilities and natural resources. In addition, risk management strategies, such as diversification, hedging, or investment in inflation-protected securities, may be used to protect portfolios from inflation-induced volatility. Finally, Institutional Investors closely monitor the central bank's activities, such as interest rates of the Reserve Bank of India (RBI) and monetary policy adjustments, which may affect inflationary expectations and market sentiment. This study aims to analyse the impact of inflation on Institutional Investors’(IIs) investment behaviour in the Indian stock market.

The impact of presidential economic approval rating on stock volatility: An industrial perspective

This paper examines the influence of presidential economic approval rating (PEAR) on stock volatility in different sectors. We find that PEAR significantly explain future stock volatility in Health Care, Consumer Staples, Information Technology and Telecom Services sectors both in- and out-of-sample. Interestingly, we find this explanatory power for all sectors exists only during the economic expansions. Finally, we show that the PEAR has long-term predictability on stock markets.

Sector Investing Risks in Different Market Conditions

GICS sector investing is a popular investment style that offers increased liquidity and reduced idiosyncratic risk as compared with investing in individual stocks. This is attested by the increase in trading volumes of ETFs tracking GICS sectors. While most investors are aware of macro-economic risks associated with GICS sectors by virtue of industry type constituting the sector, information about the relative performance of sectors in different market environments is not as keenly understood. For example, most investors know that utilities and consumer staples perform well during recessions; but most are unaware of how the sectors perform relative to one another during inflationary periods or during periods of wide credit spreads. Most of the knowledge about relative sector performance is restricted to associating the economic conditions with recessionary or expansionary phases of the business cycle. Further, individual components of certain sectors behave very differently during certain market periods, forming sub-sectors within the sectors. Investors who are focused on positioning their portfolio for certain market environments may find it beneficial to concentrate their holding in that sub-sector to the extent that it meets their growth mandates while staying within risk tolerance. This work presents a detailed comparison of risk and return characteristics of the 11 GICS sectors in five market environments: business-cycle recession, rising interest rates, rising inflation, high market volatility, and wide credit spreads. Further, it dissects the behavior of individual sector components to glean information about when it may be advisable for sector investors to focus on industry groups within sectors. Looking at the current market environment and the likely evolution of macroeconomic conditions in the near future, it extrapolates the findings to make general recommendations for sector investing in the near future.

Financial Ratios and Stock Prices: Unraveling the Dynamics in Indonesia's Industrial and Consumer Staples Sectors

Purpose: This study examines the effect of financial ratios consisting of ROA, ROE, CR, PER and EPS on stock prices. Methodology/approach: The data analysis technique used is descriptive analysis and multiple linear regression analysis. Findings: The results of this study indicate that ROE, PER, and EPS have a significant positive effect on stock prices. While the ROA and CR variables do not have a partial effect on stock prices. Practical implications: To understanding the impact of financial ratios on stock prices provides valuable insights into investment strategies. Investors can use the findings to make informed decisions to maximize potential returns. Originality/value: The originality and value of this study lie in its comprehensive analysis of financial ratios (ROA, ROE, CR, PER, and EPS) and their specific impact on stock prices. The study's focus on the Industrial and Consumer Staples sectors in Indonesia during 2017-2021 adds unique insights.

The Covid-19 Pandemic and the Consumer Staples Sector: A Test of Market Efficiency

On Wednesday March 11, 2020, the World Health Organization (WHO) declared the covid 19 outbreak a global pandemic (Cucinotta, 2020). How efficient is the consumer staples market reaction to the announcement of a global pandemic? The purpose of this study is to examine the risk adjusted returns on and around the pandemic announcement to test the semi-strong form market efficiency hypothesis using the standard event study methodology in the finance literature. Will returns in the consumer staples industry show larger than expected gains on and surrounding the WHO’s COVID-19 pandemic announcement? The finance literature offers little evidence supporting the link between pandemics and the stock market. The announcement of a pandemic by the WHO should significantly and quickly affect the market. According to Eugene Fama (1970), if the market is semi-strong form efficient, all public information is immediately factored into the market and no investor can use this information to achieve an above normal return when adjusted for risk. To study this relationship, data for the S&P 500 and 10 consumer staples sector firms were collected for the event period surrounding the announcement of the COVID-19 pandemic. This study tests the global pandemic announcement for semi-strong form market efficiency (Bacon &Howell 2021). Evidence here supports the expected positive signal associated with the sample of consumer staples sector firms in reaction to the announcement of the pandemic. Likewise, the study results support the semi-strong form efficient market hypothesis and suggest the possibility of trading on this information up to 15 days prior to the announcement consistent with the behavioral finance literature (Bacon & Howell 2021).

Music sentiment and the stock market in Vietnam

PurposeBy extending Edmans et al.’s (2021) music sentiment measures to the Vietnam market, the authors aim to investigate the impacts of music sentiment on stock market returns and volatility.Design/methodology/approachThe authors adopted Edmans et al.’s (2021) music-based sentiment to proxy for investor mood. The current study uses linear regression analysis.FindingsThe authors find that music sentiment is significantly and positively related to both stock returns and stock market volatility. The authors also show that music sentiment has a contagious effect: Global music sentiment and those in the United States, France and Hong Kong are significant drivers of the Vietnamese stock market. The authors also examine the effect on different industry returns and find that returns on stocks of firms in the communication services, consumer discretionary, consumer staples, energy, financials, healthcare, real-estate, information technology and utility sectors are significantly related to music sentiment. In addition to valence, the authors find that other Spotify audio features can be used to quantify music sentiment.Originality/valueThis study contributes to the behavioral finance literature that focuses on investor sentiment. The authors address this topic in Vietnam using high-frequency data.

The Impact Of Return On Asset(ROA), Return On Equity (ROE) And Earnings Per Share (EPS), On Stock Price In The Non Cyclical Consummer Sector Period 2017-2021

Determining the impact that earnings per share, return on assets, and return on equity have on the price of consumer staples in the period 2017-2021 This study was conducted as descriptiv quantification with secondary data type. A total is 59 consumer essential companies are listed on IDX. purposeful sampling. The data collection method used the annuall financial statement data documentation method. tested with multiple linear regression analyses. As a result, Return on Asset (ROA) has a signifficant and negative impact on stock prices, Return on Equity (X2) has a positive and significant effectt on the share price. In stock costs, Profit Per Offer (EPS) emphatically affects stock costs. The independent variables ROA, ROE, and EPS can account for 83.5 percent of the stock price, according to the coefficient of determination analysis results. Additionally, you can expand this concentrate by involving other free factors as there are then again other autonomous factors like resource turnover, DAR, DER, CR, TATO and others that can influence stock cost..
 Keywords: Roa; Roe; Eps; Stock price

Asymmetric causality between Bitcoin and tech stocks in the US market using mixed frequency data

PurposeThis study is the first to investigate the causal relationship between Bitcoin and equity price returns by sectors. Previous studies have focused on aggregated indices such as S&P500, Nasdaq and Dow Jones, but this study uses mixed frequency and disaggregated data at the sectoral level. This allows the authors to examine the nature, direction and strength of causality between Bitcoin and equity prices in different sectors in more detail.Design/methodology/approachThis paper utilizes an Unrestricted Asymmetric Mixed Data Sampling (U-AMIDAS) model to investigate the effect of high-frequency Bitcoin returns on a low-frequency series equity returns. This study also examines causality running from equity to Bitcoin returns by sector. The sample period covers United States (US) data from 3 Jan 2011 to 14 April 2023 across nine sectors: materials, energy, financial, industrial, technology, consumer staples, utilities, health and consumer discretionary.FindingsThe study found that there is no causality running from Bitcoin to equity returns in any sector except for the technology sector. In the tech sector, lagged Bitcoin returns Granger cause changes in future equity prices asymmetrically. This means that falling Bitcoin prices significantly influence the tech sector during market pullbacks, but the opposite cannot be said during market rallies. The findings are consistent with those of other studies that have established that during market pullbacks, individual asset prices have a tendency to decline together, whereas during market rallies, they have a tendency to rise independently. In contrast, this study finds evidence of causality running from all sectors of the equity market to Bitcoin.Practical implicationsThe findings have significant implications for investors and fund managers, emphasizing the need to consider the asymmetric causality between Bitcoin and the tech sector. Investors should avoid excessive exposure to both Bitcoin and tech stocks in their portfolio, as this may lead to significant drawdowns during market corrections. Diversification across different asset classes and sectors may be a more prudent strategy to mitigate such risks.Originality/valueThe study's findings underscore the need for investors to pay close attention to the frequency and disaggregation of data by sector in order to fully understand the true extent of the relationship between Bitcoin and the equity market.

Volatility spillovers across sectors and their magnitude: A sector-based analysis for Australia.

While spillover across equity markets has been extensively investigated, volatility spillover across sectors has largely been under-examined in the current literature. This paper estimates the sectoral volatility using the ARMA-GARCH model and its spillover across Australian sectors on the VAR framework during the 2010-2021 period. We then identify breakpoints in market volatility during the Covid-19 pandemic using a wavelet methodology. We find that volatility spillover across Australian sectors is very significant at 60 per cent from 2010 to 2019, reaching 90 per cent during the Covid-19 pandemic in 2020. The spillover then reverts to its pre-pandemic level in 2021. Consumer Staples and Industrials are the significant risk transmitters, whereas Financials and Real estates are the most significant risk absorbers. Our findings also indicate that Real Estate, Health Care, and Financials record the most significant increase in volatility of more than 300 per cent. Policy implications regarding risk management across Australian sectors have emerged, particularly during extreme events such as the pandemic.

Analysis on Materiality Discloser of ESG Report by Hong Kong Consumer Staple Listed Companies under HKEx

The materiality approach has been recommended as the instrument in capital market for scoping and defining the content for sustainability reporting or reports that ESG factors that are relevant to both businesses and stakeholders. The study aims to analyze whether firms’ ESG disclosure comply with the expectation of the Hong Kong Stock Market. This research selects 51 samples among year 2020 ESG reports from 107 number of Hong Kong listed companies in consumer staples industries to conduct statistical comparison analysis. Hong Kong listed companies in consumer staples industries’ concerns about environmental and social topics in ESG report are unevenly distributed. These companies that provides materiality assessment mark social aspects as priority whereas the environment aspects as least relevant to both the company and the stakeholders. This research reveal that Hong Kong food companies have different weight on disclose from HKEx. The suspected reason for low materiality level of environment aspect by those corporations is that high fine for environment disturbance may disclose by the ESG report of such companies. The speculated causes for companies mark high materiality might be in response to the current government policy of talent employment retention. The proposed suggestion to the Hong Kong Stock market as they have the imitative to regulate listed companies. To improve the quality of listed company through their ESG report, the Hong Kong exchange market could implement punishment and premium to promote these company to meet the disclose standard.

Zero-COVID policy and stock market sectoral performance in China

With the outbreak of COVID-19, the Chinese government implemented the “zero-COVID” policy as a measure to curb the spread of the virus. The different measures of the policy include widespread testing, contact tracing, and strict quarantine and isolation protocols. In view of recent changes in COVID-19 trends and other economic indicators, the Chinese government withdrew significant provisions of the zero-COVID policy in China. The present study investigates the sectoral performance of the Chinese stock market after the withdrawal of the zero-COVID policy. The study considers eighteen sectoral indices of the Shenzhen Stock Exchange of China as a sample and applies the event study methodology to study the impact of the policy withdrawal on the stock prices performance. The results of the study indicate that sectors such as hotel, consumer staples, the financial sector, real estate, media, and culture have reported significant positive movement after the withdrawal of the zero-COVID policy, while other sectors such as consumer discretionary, energy, healthcare, information technology, manufacturing, mining, technology, telecom, transportation, utilities, wholesale, and retail have shown insignificant reactions. These results also indicate that when the COVID-19 outbreak happened in China, different sectors of the economy reacted negatively except the retail and wholesale sectors, while with the withdrawal of the zero-COVID policy by the Chinese government, the reaction of investors is optimistic as different sectors are reporting either positive reactions in the stock price movement or no reaction.

Enhancing Financial Market Analysis and Prediction with Emotion Corpora and News Co-Occurrence Network

This study employs an improved natural language processing algorithm to analyze over 500,000 financial news articles from sixteen major sources across 12 sectors, with the top 10 companies in each sector. The analysis identifies shifting economic activity based on emotional news sentiment and develops a news co-occurrence network to show relationships between companies even across sectors. This study created an improved corpus and algorithm to identify emotions in financial news. The improved method identified 18 additional emotions beyond what was previously analyzed. The researchers labeled financial terms from Investopedia to validate the categorization performance of the new method. Using the improved algorithm, we analyzed how emotions in financial news relate to market movement of pairs of companies. We found a moderate correlation (above 60%) between emotion sentiment and market movement. To validate this finding, we further checked the correlation coefficients between sentiment alone, and found that consumer discretionary, consumer staples, financials, industrials, and technology sectors showed similar trends. Our findings suggest that emotional sentiment analysis provide valuable insights for financial market analysis and prediction. The technical analysis framework developed in this study can be integrated into a larger investment strategy, enabling organizations to identify potential opportunities and develop informed strategies. The insights derived from the co-occurrence model may be leveraged by companies to strengthen their risk management functions, making it an asset within a comprehensive investment strategy.

Equity-Market-Neutral Strategy Portfolio Construction Using LSTM-Based Stock Prediction and Selection: An Application to S&P500 Consumer Staples Stocks

In recent years, a great deal of attention has been devoted to the use of neural networks in portfolio management, particularly in the prediction of stock prices. Building a more profitable portfolio with less risk has always been a challenging task. In this study, we propose a model to build a portfolio according to an equity-market-neutral (EMN) investment strategy. In this portfolio, the selection of stocks comprises two steps: a prediction of the individual returns of stocks using LSTM neural network, followed by a ranking of these stocks according to their predicted returns. The stocks with the best predicted returns and those with the worst predicted returns constitute, respectively, the long side and the short side of the portfolio to be built. The proposed model has two key benefits. First, data from historical quotes and technical and fundamental indicators are used in the LSTM network to provide good predictions. Second, the EMN strategy allows for the funding of long-position stocks by short-sell-position stocks, thus hedging the market risk. The results show that the built portfolios performed better compared to the benchmarks. Nonetheless, performance slowed down during the COVID-19 pandemic.

COVID-19 Pandemic and Stock Performance: Evidence from the Sub-Saharan African Stock Markets

Emerging stock markets provide great opportunities for investment growth and risk diversification. However, they are more vulnerable to extreme market events. This study examines the effects of the COVID-19 pandemic on stock performance in sub-Saharan African stock markets. An event study method was used to determine whether there was any significant difference in sector returns before and during the pandemic, and panel data regression was used to determine the causal relationship between COVID-19 events and the abnormal returns observed. Four stock exchanges were chosen, including the two largest and two fastest-growing markets in sub-Saharan Africa. According to the study’s findings, the information technology, consumer staples, and healthcare sectors outperformed during the pandemic, while the industrials, materials, and real estate sectors underperformed. The financial and consumer discretionary proved to be the most stable sectors during the pandemic. We also observed that the imposition of lockdown had a negative impact on the performance of most sectors in sub-Saharan African markets, whereas government assistance in the form of economic stimulus packages had no significant positive impact on stock performance except in the South African market. Furthermore, we find that increases in COVID-19 cases and deaths had no negative impact on capital markets, where stocks have responded positively to economic recovery aid. The study concludes that during the COVID-19 pandemic, stocks reacted more to government actions than the occurrence of the pandemic itself.