Abstract
This purpose of this research is to provide an analysis of the reaction of equity markets in the selected developed and developing markets to the occurrence of natural disasters in countries considered to be economic leaders. The focus of the study will be narrowed down to earthquakes. The selected developed market for this study is the United States of America (USA) and the selected developing market is South Africa. The leading economy that was analysed in the study is Japan which is the largest economy globally and is susceptible to earthquakes because of its geographic location. Japan also has strong trade relations with the USA and South Africa. The key benchmark indices from the selected countries were used in the analysis. The S&P 500 was used for the USA while the ALSI Top 40 was used for South Africa. The analysis was carried out using inferential statistical methods. The abnormal returns for each index from the selected countries were analysed. This analysis was carried out in order to determine whether there were any statistically meaningful differences between the pre-event and the post-event periods’ statistical outcome. The abnormal returns were computed using the event-study methodology. Both the USA equity market and the South African equity markets displayed no reaction to the earthquake.
M.Com. (Financial Management)