Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105388
Authors: 
Solanki, Kamini
Seetharam, Yudhvir
Year of Publication: 
2014
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2084-0845 [Publisher:] Vizja Press & IT [Place:] Warsaw [Volume:] 8 [Year:] 2014 [Issue:] 3 [Pages:] 257-273
Abstract: 
While most studies examine the impact of business confidence on market performance, we instead focus on the consumer because consumer spending habits are a natural extension of trading activity on the equity market. This particular study examines investor sentiment as measured by the Consumer Confidence Index in South Africa and its effect on the Johannesburg Stock Exchange (JSE). We employ Granger causality tests to investigate the relationship across time between the Consumer Confidence Index and market performance. The results show weak evidence of a contemporaneous relationship; however, significant evidence of a Granger caused relationship is apparent. Further, changes in investor sentiment Granger-cause changes in the two indices used, generally with a lag of 9 and 12 months, but not vice versa. Thus, we find that Consumer Confidence leads JSE performance during our sample period. Our research provides evidence contradicting the common perception of consumer confidence lagging market performance, particularly in the South African context.
Subjects: 
consumer confidence
financial markets
South Africa
behavioral finance
JEL: 
C01
C58
D53
D84
G02
Persistent Identifier of the first edition: 
Document Type: 
Article
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