ANALYSIS OF CLIMATE CHANGE NEWS SENTIMENT'S IMPACT ON GCC STOCK MARKETS

Abstract

Climate change imposes severe pressure on the world's financial and economic systems. Commencing from altering the natural ecosystem and weather patterns to eventually affecting the public health. The climate change threats have notably extended to economic activities and financial markets, which will be thoroughly investigated in this study and precisely its impact on Qatar's and UAE stock market's performance. To showcase the considerable impact of climate change, this study will denote news related to climate change, environmental issues, and natural disasters sourced from Thomson Reuters' news monitor. A set of climate change news indices with distinctive classifications were then constructed. The classification of climate change news is centered on the region of publication (Global, GCC, Local news sources) and whether natural disaster news is included. For the period spanning from June 2016 to June 2023, the study compiled a total of 8,314 and 27,193 daily news headlines for Qatar and UAE, respectively. Climate change news undergoes a preprocessing for tidying the news text corpus to obtain a sentiment score utilizing widely used lexicons in this field. The scope of this analysis includes the use of both the Valence Aware Dictionary for Sentiment Reasoning (VADER) as well as the Loughran and McDonald (LM) sentiment approaches. Empirically, the study shows that the climate change news sentiment has varying impacts on Qatar and UAE's general and ESG indices. This research uncovers patterns of behavior that can help investors and regulators assess, recognize, and mitigate climate change-associated risks.