Do foreign risks affect the stock market in an emerging economy? A time-series analysis

The recent global uncertainty had influenced the choices of investors. As a result, investors may defer purchases and investments in the stock market owing to a wait-and-see policy in the face of global uncertainty. In this context, this study's main objective is to explore the link between global uncertainty and the stock market in Nigeria, utilising quarterly data ranging from January 2010 and December 2018. The study deployed ARDL and Toda-Yamamoto causality test to examine this interconnection. The finding from the ARDL bounds test revealed evidence of cointegration between the stock market index and its determinants in the long run. It further shows that the stock market is negatively affected by global risk, while it is evident that economic growth positively impacts the stock market in Nigeria. However, the exchange rate impacts on the stock market tend to be insignificant in the long run.