Master of Commerce in Finance cum laude graduate Ms Thabile Nkosi’s research on investor sentiment and financial crises on the Johannesburg Stock Exchange offers new insights into sector-specific risk transmission and mitigation strategies by holistically addressing dynamic connectedness and hedging effectiveness among sector indices.
‘It analyses these factors within the South African context, an area previously underexplored. The examination of investor reactions to economic challenges adds a critical human-interest dimension, highlighting how market participants adapt to crises,’ explained Nkosi.
Supervised by Drs Rethabile Nhlapho and Hilary Muguto, the study revealed that dynamic connectedness among these indices varies significantly, especially during financial turbulence, with heightened interconnectedness and risk spillovers.
‘Notably, the financial and industrial sectors acted as net transmitters of risk, while the consumer services sector demonstrated the highest hedging effectiveness. Incorporating investor sentiment into the analysis improved the robustness of the models, highlighting its crucial role in influencing financial dynamics,’ said Nkosi.
She added that the study contributes valuable academic knowledge, offering practical guidance for local investors, financial institutions, and policymakers to enhance financial stability and decision-making in a rapidly evolving economic environment.
‘My passion for this topic stems from its ongoing relevance to economic fluctuations and investor behaviour, driving my commitment to uncover insights that can improve financial decision-making and risk management. Studying for this qualification was a challenging yet enriching experience. The experience was intellectually stimulating and professionally enriching, as it broadened my expertise and expanded my professional network.’
Words: Thandiwe Jumo
Photograph: Sethu Dlamini