Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies
Despite the surge in interest of international investors in African and Islamic equities as portfolio diversifiers of international equities, surprisingly, little attention has been paid to the diversifying properties of these stocks against each other. Thus, we examine the spillover and connectedne...
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2459198 |
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| author | Andrew Phiri Izunna Anyikwa |
| author_facet | Andrew Phiri Izunna Anyikwa |
| author_sort | Andrew Phiri |
| collection | DOAJ |
| description | Despite the surge in interest of international investors in African and Islamic equities as portfolio diversifiers of international equities, surprisingly, little attention has been paid to the diversifying properties of these stocks against each other. Thus, we examine the spillover and connectedness effects between conventional African and global Islamic equities using the time-varying parameter (TVP-VAR) connectedness approach applied to daily time series spanning 16/05/2013 to 28/02/2024. We also adopted the minimum connectedness portfolio (MCoP) approach to extract multivariate and bivariate optimal portfolio weights for different combinations of African and Islamic equities. We find that the transmission effects of systemic shocks from Islamic markets to African markets are more prominent for Egyptian equities that are Sharia-compliant. Furthermore, larger, non-Sharia-compliant African markets such as South Africa and its closely integrated allies, namely Namibia and Botswana, are responsible for systemic shocks to other African markets. Lastly, larger African markets, such as Egypt, South Africa, and Namibia, improve the hedging effectiveness of multivariate optimum portfolios, whereas Islamic equities are more suitable for enhancing the hedging effectiveness of pairwise portfolio combinations with African equities. The investor and policy implications of these findings are further discussed. |
| format | Article |
| id | doaj-art-be0de4f1b0a5427fb12ebde69dafce72 |
| institution | Kabale University |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-be0de4f1b0a5427fb12ebde69dafce722025-02-05T05:55:58ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2459198Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategiesAndrew Phiri0Izunna Anyikwa1Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South AfricaDepartment of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South AfricaDespite the surge in interest of international investors in African and Islamic equities as portfolio diversifiers of international equities, surprisingly, little attention has been paid to the diversifying properties of these stocks against each other. Thus, we examine the spillover and connectedness effects between conventional African and global Islamic equities using the time-varying parameter (TVP-VAR) connectedness approach applied to daily time series spanning 16/05/2013 to 28/02/2024. We also adopted the minimum connectedness portfolio (MCoP) approach to extract multivariate and bivariate optimal portfolio weights for different combinations of African and Islamic equities. We find that the transmission effects of systemic shocks from Islamic markets to African markets are more prominent for Egyptian equities that are Sharia-compliant. Furthermore, larger, non-Sharia-compliant African markets such as South Africa and its closely integrated allies, namely Namibia and Botswana, are responsible for systemic shocks to other African markets. Lastly, larger African markets, such as Egypt, South Africa, and Namibia, improve the hedging effectiveness of multivariate optimum portfolios, whereas Islamic equities are more suitable for enhancing the hedging effectiveness of pairwise portfolio combinations with African equities. The investor and policy implications of these findings are further discussed.https://www.tandfonline.com/doi/10.1080/23322039.2025.2459198Islamic equitiesAfrican equitiesTVP-VAR connectednessminimum connectedness portfolio (MCoP) approachhedging effectivenessFinance |
| spellingShingle | Andrew Phiri Izunna Anyikwa Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies Cogent Economics & Finance Islamic equities African equities TVP-VAR connectedness minimum connectedness portfolio (MCoP) approach hedging effectiveness Finance |
| title | Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies |
| title_full | Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies |
| title_fullStr | Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies |
| title_full_unstemmed | Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies |
| title_short | Connectedness and spillovers between African and global Islamic equities: implications for portfolio hedging and investment strategies |
| title_sort | connectedness and spillovers between african and global islamic equities implications for portfolio hedging and investment strategies |
| topic | Islamic equities African equities TVP-VAR connectedness minimum connectedness portfolio (MCoP) approach hedging effectiveness Finance |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2459198 |
| work_keys_str_mv | AT andrewphiri connectednessandspilloversbetweenafricanandglobalislamicequitiesimplicationsforportfoliohedgingandinvestmentstrategies AT izunnaanyikwa connectednessandspilloversbetweenafricanandglobalislamicequitiesimplicationsforportfoliohedgingandinvestmentstrategies |