ENERGY MARKET DYNAMICS AND EMERGING EQUITY MARKETS: INSIGHTS FROM A WAVELET-BASED TIME–FREQUENCY ANALYSIS

Abstract

This study explores the dynamic relationship between clean energy stocks and equity markets across three major regions APAC, EMEA, and the Americasusing wavelet coherenceanalysis over the period 2015–2024. By examining five major global crises Oil Crisis, Climate Crisis, COVID-19 pandemic, Russia–Ukraine War, and Israel–Hamas conflict the research uncovers how market interactions evolve across both time and frequency domains. The findings reveal region-specific patterns: equity markets in the APAC region, such as India, Taiwan, and Indonesia, demonstrate strong coherence with clean energy, particularly during pandemic and geopolitical shocks. EMEA markets, especially oil-dependent economies, exhibit heightened sensitivity during energy disruptions, while certain European markets show signs of increasing decoupling driven by diversification into sustainable assets. In the Americas, markets like Brazil and Mexico remain volatile due to energy dependency, whereas mineral-rich nations like Chile and Peru show more stable interactions with clean energy. Descriptive statistics confirm the presence of high volatility, non-normal distributions, and persistent asymmetries, reinforcing the use of non-linear modeling techniques. The study concludes that clean energy not only reflects environmental considerations but also plays a strategic financial role, offering predictive insights and risk mitigation across emerging markets during periods of systemic uncertainty.