Geopolitical shockwaves: the Russia-Ukraine war’s impact on BRICS financial markets

The Russia-Ukraine War triggered global financial market turmoil and disrupted the global supply chain, including agriculture and energy. This study explores the impact of the Russia-Ukraine war on BRICS nations’ stock markets, highlighting varying degrees of volatility and contagion effects. It examines the extent of contagion in the BRICS stock markets and their financial linkages by employing the multivariate DCC-GARCH model. The study reveals sensitive turbulence in Russian markets post-crisis, influenced by its direct involvement in the conflict. Brazil and China experienced higher market volatility after the event, and Brazil shifted its financial linkages with the global market. Conversely, the Indian market experienced eased overall volatility, but its financial linkage with Russia has increased due to its trade partnership. In the post-event period, China and South African markets indicate structural market decoupling. The long-term volatility persists over the short-term volatility of BRICS market dynamics. This study underscores the implications for investors and policymakers, emphasising the need for adjustments in monetary and fiscal policies to stabilise financial markets amid geopolitical uncertainties. This study examines the contagion effects of the ongoing Russia-Ukraine war on BRICS stock markets and highlights how geopolitical risk impacts the financial stability of interconnected and interdependent countries. This study provides a significant understanding of financial vulnerabilities during geopolitical issues by differentiating contagion from spillover. The findings offer important insights for the stakeholders, emphasising the need for strategic risk management through proper policy interventions and diversification to enhance financial resilience even during geopolitical issues.