Examination of Stock Markets Performance in Emerging Economies during Difficult Times: Role of Terrorist Events

  • Dr. Ashfaq Ahmad, Aamir Sohail, Adil Riaz, Farhad Hussain, Iqra Ihsan


This study examines the effect of selected local and global terrorist events on Pakistan Stock Exchange by assessing KMI-30 and KSE-30 during the last decade. Data was collected for the daily closing stock prices of KMI-30 and KSE-30 for a period of 10 years (2010 to 2019). Twelve major terrorist events were selected from the South Asian Terrorism Portal (SATP) creating negative outcomes (deaths, injuries and other damages). Event study method was applied through estimation windows for Pre-Event, Event and Post-Event. Results indicate that the majority of the events have a significant impact on KSE-30 and KMI-30. More specifically the findings suggested that, Suicide attack on political offices, Attack on the Jamia masjid Madina, Twin suicide assaults at Parachinar, Assault on Army Public School, Paris, France bombing at bar, restaurant, theater and stadium, Self-destruction bombarding in Belgium, Suicide bombarding at Quetta’s Civil Hospital, Attack on Shrine of Lal Shahbaz and Attack on the political rally of the Balochistan Awami Party has significant effect on both markets. Further, results indicate that Attack on Shias at Alamdar road in Quetta, Bomb blast at Karbala Maula Imambargah and Attack on the New Sariab Police Training College has insignificant impact on both markets. According to the results of the study it is clear that KMI-30 and KSE-30 are unsystematic and does not suck up noisy information immediately. Efficient Market Hypotheses proves here wrong. Study has also shown that local events have severe effect on both indexes as compare to global events. This study could enhance understanding of different stakeholders regarding influence of terrorism on KMI-30 Index, Islamic stock market and KSE-30 Index, conventional index.