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Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya
In the presence of herding, collective investor behaviour tends to gravitate toward the same or similar investments. When herding behaviour becomes widespread, it can create asset bubbles or market crashes through panic-driven buying and selling. Consequently, comprehending how markets might react d...
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| Format: | Thesis |
| Language: | English English |
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School of Economics
2025
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| _version_ | 1867613167395274752 |
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| access_status_str | Open Access |
| author | Swart, Hermanus |
| author2 | Ndlovu, Godfrey |
| author_browse | Ndlovu, Godfrey Swart, Hermanus |
| author_facet | Ndlovu, Godfrey Swart, Hermanus |
| author_sort | Swart, Hermanus |
| collection | Thesis |
| description | In the presence of herding, collective investor behaviour tends to gravitate toward the same or similar investments. When herding behaviour becomes widespread, it can create asset bubbles or market crashes through panic-driven buying and selling. Consequently, comprehending how markets might react during periods of crisis becomes crucial for effectively hedging against artificially inflated asset prices. The objective of this paper is to examine the herding behaviour of investors in African markets – namely South Africa, Nigeria, Egypt and Kenya – using weekly and monthly stock data from January 2000 to October 2023. The study applies the cross-sectional standard deviation of returns (CSSD) and the cross-sectional absolute deviation of returns (CSAD) to examine herding in both normal and turbulent times, particularly during periods of significant turbulence such as the Global Financial Crisis (GFC) in 2008/9 and the recent COVID-19 pandemic. The findings indicate the existence of herding behaviour in the four African stock markets across various periods, with herding being less prominent during highly turbulent phases like the GFC and the COVID-19 pandemic. Additionally, the study reveals a significant spillover from the South African stock market to Nigeria and Kenya during the GFC and to Egypt during the COVID-19 pandemic. Furthermore, U.S. investor sentiment, represented by the VIX index, does not appear to influence herding behaviour in African stock markets. This would suggest that the African markets are correlated and that there are instances of high indications of herding behaviour. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/41927 |
| institution | University of Cape Town (South Africa) |
| language | English eng |
| last_indexed | 2026-06-10T12:31:50.330Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/41927 Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya Swart, Hermanus Ndlovu, Godfrey Stock markets Kenya South Africa Nigeria Egypt In the presence of herding, collective investor behaviour tends to gravitate toward the same or similar investments. When herding behaviour becomes widespread, it can create asset bubbles or market crashes through panic-driven buying and selling. Consequently, comprehending how markets might react during periods of crisis becomes crucial for effectively hedging against artificially inflated asset prices. The objective of this paper is to examine the herding behaviour of investors in African markets – namely South Africa, Nigeria, Egypt and Kenya – using weekly and monthly stock data from January 2000 to October 2023. The study applies the cross-sectional standard deviation of returns (CSSD) and the cross-sectional absolute deviation of returns (CSAD) to examine herding in both normal and turbulent times, particularly during periods of significant turbulence such as the Global Financial Crisis (GFC) in 2008/9 and the recent COVID-19 pandemic. The findings indicate the existence of herding behaviour in the four African stock markets across various periods, with herding being less prominent during highly turbulent phases like the GFC and the COVID-19 pandemic. Additionally, the study reveals a significant spillover from the South African stock market to Nigeria and Kenya during the GFC and to Egypt during the COVID-19 pandemic. Furthermore, U.S. investor sentiment, represented by the VIX index, does not appear to influence herding behaviour in African stock markets. This would suggest that the African markets are correlated and that there are instances of high indications of herding behaviour. 2025-09-30T13:04:58Z 2025-09-30T13:04:58Z 2025 2025-09-30T13:00:00Z Thesis / Dissertation Masters MCom http://hdl.handle.net/11427/41927 en eng application/pdf School of Economics Faculty of Commerce University of Cape Town |
| spellingShingle | Stock markets Kenya South Africa Nigeria Egypt Swart, Hermanus Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| thesis_degree_str | Master's |
| title | Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| title_full | Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| title_fullStr | Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| title_full_unstemmed | Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| title_short | Herding behaviour in African stock markets: evidence from South Africa, Nigeria, Egypt & Kenya |
| title_sort | herding behaviour in african stock markets evidence from south africa nigeria egypt amp kenya |
| topic | Stock markets Kenya South Africa Nigeria Egypt |
| url | http://hdl.handle.net/11427/41927 |
| work_keys_str_mv | AT swarthermanus herdingbehaviourinafricanstockmarketsevidencefromsouthafricanigeriaegyptampkenya |