ANALYSIS OF STOCK MARKET REACTIONS TO THE ISRAEL-PALESTINE CONFLICT (CASE STUDY ON ENERGY SECTOR STOCKS IN INDONESIA)

Abstract

Objective: This study examines the impact of the Israel-Palestine conflict, specifically the Hamas attack on Israel on October 7, 2023, on Indonesia’s energy sector stocks. Research Design & Methods: Using an event study methodology, the research analyzes abnormal returns, security return variability, and trading volume activity of 66 energy companies listed on the Indonesia Stock Exchange. The analysis employs mean difference tests conducted in Eviews 13. Findings: The results reveal significant differences in abnormal returns before and after the event, indicating market sensitivity to geopolitical risks. However, no substantial changes in security return variability or trading volume activity are observed, reflecting market stability overall. Practical Implications: This study underscores the need for investors to implement risk management strategies and diversify portfolios to mitigate the impacts of geopolitical events. Contribution & Value Added: This research highlights the importance of company fundamentals and portfolio diversification in investment decisions by demonstrating a limited correlation between geopolitical events and stock trading volumes