The impact of credit rating as scoring methods on GCC market indexes

The aim of this paper is to investigate whether country credit rating changes announcement has a significant impact on GCC Stock Market Index. As per researcher knowledge, none has been done on the GCC. Using event study methods in estimation of the relationship between the credit rating agency Moody’s and GCC stock markets indexes over 11 years period between 2004 to Jun 2015. The sample of this study is relatively related to GCC stock markets indexes, it focuses on all the long-term country credit rating decisions by Moody’s and its impact on short-terms investments and stock markets. Moreover it considers the gap between long-terms and the short-terms investor singular events. The result of our paper indicate that the impact of credit rating agency Moody’s on GCC Stock Markets Indexes is insignificant and have no impact, taking into consideration the impact of 2008 financial crisis.

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Sovereign Credit Rating Announcements and Baltic Stock Markets

Organizations and Markets in Emerging Economies ◽

10.15388/omee.2011.2.1.14289 ◽

2011 ◽

Vol 2 (1) ◽

pp. 51-62 ◽

Cited By ~ 9

Author(s):

Asta Klimavičienė

Keyword(s):

Stock Markets ◽

Credit Rating ◽

Relevant Information ◽

Price Impact ◽

Delayed Reaction ◽

Asymmetric Reaction ◽

Credit Rating Agency ◽

Sovereign Credit ◽

The Impact ◽

Sovereign Credit Rating

This study examines whether sovereign credit rating announcements convey price relevant information to investors in Baltic stock markets, and tests the degree of anticipation and price reaction. Event study methodology is employed to test for the price impact of sovereign credit rating announcements by Moody’s, S&P, and Fitch. This enables to analyse whether there is an anticipation of the forthcoming announcement in a particular market, a price impact on the announcement day, and a possible delayed reaction. Results indicate that there is an asymmetric reaction: the price impact of negative events is several times larger than that of positive events. Moreover, although some types of rating announcements are anticipated, there is still a significant price impact on the announcement day. The impact differs across the three Baltic stock markets, and depends on the credit rating agency issuing the announcement. The main conclusion is that sovereign credit rating announcements contain pricing relevant news in addition to information already in a public domain.

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The Impact of Covid-19 Spread on Stock Markets: The Case of the GCC Countries

International Business Research ◽

10.5539/ibr.v13n11p16 ◽

2020 ◽

Vol 13 (11) ◽

pp. 16

Author(s):

Nader Alber ◽

Amr Saleh

Keyword(s):

Stock Market ◽

Stock Markets ◽

Stock Market Index ◽

Market Returns ◽

Stock Market Returns ◽

Market Index ◽

Stock Market Return ◽

Gcc Countries ◽

Developed Stock Markets ◽

The Impact

This paper attempts to investigate the effects of 2020 Covid-19 world-wide spread on stock markets of GCC countries. Coronavirus spread has been measured by cumulative cases, new cases, cumulative deaths and new deaths. Coronavirus spread has been measured by numbers per million of population, while stock market return is measured by Δ in stock market index. Papers conducted in this topic tend to analyze Coronavirus spread in the highly infected countries and focus on the developed stock markets. Countries with low level of infection that have emerging financial markets seem to be less attractive to scholars concerning with Coronavirus spread on stock markets. This is why we try to investigate the GCC stock markets reaction to Covid-19 spread.   Findings show that there are significant differences among stock market indices during the research period. Besides, stock market returns seem to be sensitive to Coronavirus new deaths. Moreover, this has been confirmed for March without any evidence about these effects during April and May 2020.

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The impact of market sectors and rating agencies on credit ratings: global evidence

The Journal of Risk Finance ◽

10.1108/jrf-09-2017-0145 ◽

2019 ◽

Vol 20 (5) ◽

pp. 389-410

Author(s):

Kerstin Lopatta ◽

Magdalena Tchikov ◽

Finn Marten Körner

Keyword(s):

Credit Risk ◽

Credit Rating ◽

Credit Ratings ◽

Content Type ◽

Rating Agencies ◽

Credit Rating Agency ◽

Rating Agency ◽

Investment Grade ◽

The Impact ◽

Rating Downgrades

Purpose A credit rating, as a single indicator on one consistent scale, is designed as an objective and comparable measure within a credit rating agency (CRA). While research focuses mainly on the comparability of ratings between agencies, this paper additionally questions empirically how CRAs meet their promise of providing a consistent assessment of credit risk for issuers within and between market segments of the same agency. Design/methodology/approach Exhaustive and robust regression analyses are run to assess the impact of market sectors and rating agencies on credit ratings. The examinations consider the rating level, as well as rating downgrades as a further measure of empirical credit risk. Data stems from a large global sample of Bloomberg ratings from 11 market sectors for the period 2010-2018. Findings The analyses show differing effects of sectors and agencies on issuer ratings and downgrade probabilities. Empirical results on credit ratings and rating downgrades can then be attributed to investment grade and non-investment grade ratings. Originality/value The paper contributes to current finance research and practice by examining the credit rating differences between sectors and agencies and providing assistance to investors and other stakeholders, as well as researchers, how issuers’ sector and rating agency affiliations act as relative metrics.

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Credit Rating Changes and Stock Market Reaction in the Kingdom of Bahrain

International Journal of Economics and Finance ◽

10.5539/ijef.v8n8p23 ◽

2016 ◽

Vol 8 (8) ◽

pp. 23 ◽

Cited By ~ 1

Author(s):

Marwan M. Abdeldayem ◽

Ramzi Nekhili

Keyword(s):

Stock Market ◽

Event Study ◽

Stock Prices ◽

Banking Sector ◽

Credit Rating ◽

Market Reaction ◽

Stock Market Reaction ◽

Rating Changes ◽

The Impact

<p>Between 2014 and 2015, the oil price almost halved. Since then, it has fallen a further 40%. Consequently, Moody’s Investors Service has downgraded Bahrain’s long-term issuer rating from Baa3 to Ba1with a negative outlook and placed it on review for further downgrade. In this context, previous literature reaches no agreement about the impact of credit rating changes on stock prices. Some studies indicate that credit rating changes do not affect stock prices, while others conclude they do. Therefore, this study aims to examine whether credit rating change has a significant impact on Bahraini stock prices. We conducted an event study to analyze stock market reaction to such news in the Kingdom of Bahrain. Even though Bahrain has witnessed a series of sovereign downgrades over the past five years, the latest downgrading event in February 17, 2016, has been followed by a credit rating downgrade of its banking sector in March 7, 2016. Hence the choice of the sample period of the event study includes both these downgrading events over the period of study from January 2, 2014 till March 22, 2016. Three sectors were selected from the Bahrain all share index: banks, service and industrial. The findings of the study reveal that sovereign rating downgrade has some mixed pre-announcement and post-announcement effects and credit rating downgrade provides useful information. Overall, the results indicate that downgrades and negative outlook announcements have an adverse impact on long-term equity returns, but little impact on short-term performance.</p>

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Macroeconomic Determinants of Stock Market Fluctuations: The Case of BIST-100

Economies ◽

10.3390/economies7010008 ◽

2019 ◽

Vol 7 (1) ◽

pp. 8 ◽

Cited By ~ 4

Author(s):

Caner Demir

Keyword(s):

Stock Market ◽

Stock Markets ◽

Stock Exchange ◽

Capital Inflows ◽

Foreign Direct Investments ◽

Domestic Currency ◽

Stock Market Index ◽

Macroeconomic Factors ◽

Market Index ◽

The Impact

The purpose of this study is to analyze the impacts of some prominent macroeconomic factors on the Turkish Stock Market index, BIST-100 (Borsa Istanbul-100). For centuries, and mostly since the 20th century, stock markets are at the heart of economies. In our era, the largest economic crises arise from the stock market instabilities and thus, the stock markets are the focus of interest of the economy. Economists, investors, and policymakers try to predict the tendency of share prices, which substantially depend on foreign and domestic macroeconomic factors. Within this purpose, this study tries to investigate the impact of some selected macroeconomic factors on BIST-100 index over the 2003Q1–2017Q4 period. The findings obtained from the quarterly data via the ARDL Bounds Test suggest that economic growth, the relative value of the domestic currency, portfolio investments and foreign direct investments raise the stock market index while interest rate and crude oil prices negatively affect it. The results briefly reveal that the Istanbul Stock Exchange Market needs stronger domestic currency, higher international capital inflows, and lower energy and investment costs.

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Are credit rating agency analysts valuable?

The Journal of Risk Finance ◽

10.1108/jrf-11-2014-0159 ◽

2015 ◽

Vol 16 (4) ◽

pp. 378-394 ◽

Cited By ~ 1

Author(s):

Rahmi Erdem Aktug ◽

Nandu (Nandkumar) Nayar ◽

Jesus M Salas

Keyword(s):

Credit Rating ◽

Securities And Exchange Commission ◽

Market Reactions ◽

Content Type ◽

Credit Rating Agency ◽

Rating Agency ◽

Financial Firms ◽

The Usa ◽

Debt Market ◽

The Impact

Purpose – This paper aims to determine the equity and debt market reactions of firms to the news of their hiring a credit rating agency (CRA) analyst. Due to recent controversies related to CRAs, the US Securities and Exchange Commission (SEC) requires disclosure of the hiring of an analyst if the analyst recently worked for a rating agency that previously provided a rating for the hiring firm. The authors use those filings to estimate the market value of a credit rating analyst to the hiring firm. Design/methodology/approach – This paper examines the impact of analyst transfers from rating agencies to financial firms in the USA between 2006 and 2014. Findings – The authors find that the hiring of such analysts suggests a value increase for the debt securities of the hiring firm but no such value phenomenon for the equity of the employer firm. Research limitations/implications – Thus, markets apparently perceive that credit analysts bring valuable inside knowledge about potential clients and about the credit rating formation process to their employer. Practical implications – This study confirms the need for additional disclosure from CRAs. This study could help the SEC as it discusses ways to require additional disclosure (those discussions are already taking place. New regulations will come out some time in the next couple of years). Originality/value – This study is the first to examine the impact of such transfers on the prices of marketed securities of firms hiring such analysts.

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The impact of terror attacks on global sectoral capital markets: An empirical study

The Economics of Peace and Security Journal ◽

10.15355/epsj.14.1.46 ◽

2019 ◽

Vol 14 (1) ◽

Cited By ~ 1

Author(s):

Stelios Markoulis ◽

Nikolas Neofytou

Keyword(s):

Abnormal Returns ◽

Global Market ◽

Stock Market Index ◽

Market Effects ◽

Terror Attacks ◽

Market Index ◽

Event Study Method ◽

Short And Long Term ◽

The Impact

This article examines the effects of fifteen major terror attacks perpetrated in the U.S. and Europe between 2001 and 2017 on a general global stock market index as well as on industry-specific indices, namely (1) airlines, (2) global hotels, restaurants, and leisure (hospitality), and (3) global utilities. Using an event-study method, we show that attacks tend to result in significant negative abnormal returns on the day of attack which, on occasion, persist for a few days. As expected, adverse market effects appear more pronounced, in terms of magnitude and persistence, for the global airline and hospitality industries than for the global utilities industry. Attacks in Europe since 2015 show no adverse global market effects, with two late exceptions (the London Bridge and Barcelona attacks, both in 2017). This might suggest that just when investors and markets seemed to have learned to cope with attacks, these two latter events caused some concern again. Implications of our findings for short- and long-term global investor strategy are discussed.

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