Paulo Alexandre

In the context of the global pandemic of 2020 and the Russian invasion of Ukraine in 2022, a newfound interest is emerging in understanding the interconnections between the Dow Jones (United States), Amman SE General (Jordan), BLSI (Lebanon), EGX 30 (Egypt), ISRAEL TA 125 (Israel), MASI (Morocco), and MOEX (Russia) indices and the precious metals markets Gold Bullion LBM, Silver, Handy & Harman, London Platinum, from January 1, 2018 to November 23, 2023. The study aimed to determine whether precious metals such as Gold, Silver, and Platinum can be considered hedging assets to the stock markets of the Middle East and North Africa (MENA) countries, i.e., whether investors operating in these regional markets can rebalance their portfolios with these precious metals. The structural vector autoregressive (SVAR) methodology allowed assessing the influence of the analyzed markets on each other regarding price formation. The results show that the markets interacted very significantly during the stress period. Platinum was the market that most influenced its peers (1 to 8 comovements), the MOEX, 1 to 7, MASI, 2 to 6, the Dow Jones went from 4 to 7 comovements, the Amman SE General and EGX 30 markets went from 1 to 4, the Israeli market (ISRAEL TA 125) and Silver went from 2 to 4 comovements, and finally the Gold Bullion LBM from 3 to 4. The study’s conclusions contain important information for investors, policymakers, and other participants in the financial energy markets.

Acknowledgments
The authors are grateful for the comments and suggestions from reviewers that helped improve the quality of the manuscript. Rui Dias is pleased to acknowledge the financial support from Instituto Superior de Gestão (ISG) [ISG - Business & Economics School], CIGEST.

Type of the article: Research Article

Abstract
This study is motivated by the rise of the Fintech sector and its relevant role in the growth and development of the banking sector. Its purpose is to examine the influence on price formation between indices related to Financial Technology companies (Fintech) and regional stock markets in Europe, emerging markets, Latin America, and the United States. The study uses the Gregory-Hansen test to assess the long-term comovements between the main Fintech-related and regional stock indices. The results indicate that the characteristics of assets as hedging instruments can change over time and in different circumstances. During the pre-conflict period, 26 long-term comovements were identified between the Fintech indices and the regional stock markets, and 31 long-term comovements were identified during the conflict period. The Emerging Markets, Latin America, and S&P 500 stock indices were considered full hedging assets but partially lost these characteristics during the Conflict period. In the conflict sub-period, the European regional stock market displayed the characteristics of a hedging asset, as it did not influence the prices of any of the indices analyzed. The study’s implications suggest that assets behave differently in different market conditions, so investors must adapt their asset allocation strategies to manage risk efficiently and build resilient investment portfolios. These findings are also relevant for financial institutions, particularly banks, as they continue to integrate Fintech-driven innovations into their business models and risk management frameworks.

Acknowledgments
The authors are also pleased to acknowledge the financial support from Instituto Politécnico de Setúbal.