AN ANALYSIS OF THE IMPACT OF EL NINO-SOUTHERN OSCILLATION EVENTS ON THE STOCK PRICES OF RICE IN INDONESIA IN THE YEAR 2023

• Main Author: Leong Aura Faatihah, Lucelle
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85636
• Institution: Institut Teknologi Bandung

The purpose of this study is to analyze the impact of the El Niño-Southern Oscillation (ENSO), with a specific emphasis on El Niño, on the returns of Indonesian rice stocks. Additionally, the study seeks to determine if these climatic occurrences generate major inequalities in the responses of individuals in the financial market. The agriculture sector, which is strongly dependent on weather conditions, has traditionally been subjected to economic troubles as a result of El Niño episodes, which are marked by elevated ocean temperatures and widespread climatic disruptions. In Indonesia, El Niño has been linked to extended periods of drought, which cause a delay in the planting and harvesting of rice. This delay has a direct impact on the economic stability of rural inhabitants as well as their ability to ensure food security. An event research approach is utilized in order to analyze the abnormal returns of selected stock prices. This analysis provides insights into whether or not these climatic changes generate major negative market reactions or whether or not the market underreacts to such events. The purpose of this analysis is to evaluate the impact of these events. The purpose of this research is to provide light on both the immediate and delayed financial implications that El Niño events have on the agricultural sector. This will be accomplished by linking historical data with stock performance before, during, and after large El Niño activities. Policymakers and investors will find the findings to be of utmost importance when it comes to incorporating climate risks into economic planning and investment strategies. This will ultimately assist in mitigating possible losses that may be incurred as a result of future El Niño episodes. It is proposed that future research be conducted to incorporate trading volume activity as an additional research variable in order to obtain a more comprehensive research perspective. In addition to this, the incorporation of additional sectoral indicators and the modification of the approach used to anticipate results might also be of assistance in enhancing future study.