Impact of Natural Disasters, Terrorism and Political News on KSE-100 Index

Mian Ahmad Hanan, Saleem Noshina, Saqib Ali Siddiqui and Shahid Imran

Abstract

This paper discusses the impact of news related to natural disaster, terrorism and political on the Karachi Stock Exchange (KSE-100) index. This study is based on Event Study Methodology. It focuses on 21 different news events:10 political, 9 terrorism and 2 natural disasters. It attempts to determine the statistical relationship and effect of these events on the KSE -100 index by 
using an 11 day stock market window. This paper concludes that news events have a strong impact on the KSE-100 index and among political, terrorism and natural disaster events; news related to terrorism has the most profound influence on trend of KSE-100 index. It also shows that the bigger the news event the greater is the impact on KSE-100 index. It also supports the notion that good news has a positive and bad news has a negative impact on the KSE-100 index. This study also reveals that the Karachi Stock Exchange is “informationally efficient.”