Abstract
This research is a comprehensive examination of the effect of oil fee variations on the Johannesburg Stock Exchange (JSE) top 40 index for the duration of the COVID-19 pandemic. The primary goal was to determine whether a persistent association exists among oil prices and the JSE top 40 index. It is important to note that there is limited prior research exploring the connection between these variables in the South African context, especially during the COVID-19 pandemic. This study utilised monthly data from January 2019 to December 2020 and employed the Johansen Cointegration test to address the research questions.
This study’s findings reveal the absence of long-run relationship among the price of oil and the JSE Top 40 index. However, when this study examined how these two variables have affected each other within the short run, the results show that it takes up to 12 months for the JSE Top 40 index to return to equilibrium after a sudden change in oil prices. Furthermore, our findings indicate that oil prices are primarily influenced by their own fluctuations, and that the price of oil does not guarantee changes in the JSE Top 40 index. This suggests that the JSE Top 40 index’s price fluctuations were not significantly influenced by changes of the price of oil during the COVID-19 pandemic.
Keywords: Oil fee variations: Johannesburg Stock Exchange; COVID-19 pandemic; Stationarity & Long run relationship.