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<p>This study examines the dynamic impact of the U.S.–China trade war and geopolitical risks on African stock market returns. Using Wavelet Coherence analysis and the Quantile Vector Autoregression (QVAR) model, we capture both time–frequency dynamics and regime-specific connectedness. Drawing on data from seven major African stock exchanges, Geopolitical Risk (GPRI) and U.S.–China Trade Tension (UCTI) indices from January 2007 to February 2024, the results reveal that African markets are not immune but exhibit state-dependent vulnerability. During calm market conditions, trade tensions dominate as the main shock transmitter, whereas geopolitical risks become more influential in crisis periods. The Johannesburg Stock Exchange (JSE) emerges as a key transmitter of shocks, while the Nigerian Exchange (NGX) remains the largest receiver. These findings underscore the need for targeted regional risk management and coordinated policy responses to enhance Africa’s financial resilience against external shocks.</p>

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Immune or vulnerable? African stock markets’ response to U.S.–China trade wars and geopolitical tensions

  • 期刊论文

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  • 发表日期：

    2025年11月12日

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  • David Korsah,
  • Seth Kwadwo Danso

摘要

This study examines the dynamic impact of the U.S.–China trade war and geopolitical risks on African stock market returns. Using Wavelet Coherence analysis and the Quantile Vector Autoregression (QVAR) model, we capture both time–frequency dynamics and regime-specific connectedness. Drawing on data from seven major African stock exchanges, Geopolitical Risk (GPRI) and U.S.–China Trade Tension (UCTI) indices from January 2007 to February 2024, the results reveal that African markets are not immune but exhibit state-dependent vulnerability. During calm market conditions, trade tensions dominate as the main shock transmitter, whereas geopolitical risks become more influential in crisis periods. The Johannesburg Stock Exchange (JSE) emerges as a key transmitter of shocks, while the Nigerian Exchange (NGX) remains the largest receiver. These findings underscore the need for targeted regional risk management and coordinated policy responses to enhance Africa’s financial resilience against external shocks.