The Yield and Volatility of Financial Markets in the UK and China under the Russia-Ukraine Conflict


  • Haoyu Liu



Russia-Ukraine conflict; Externalities; Crude Oil; VAR; ARMA-GARCH.


The Russia-Ukraine conflict was officially fought on 24 February 2022, heightening international tensions and causing externalities to the global economy, resulting in the ensuing volatility of crude oil prices. Based on the broader context that the Russia-Ukraine conflict imposes significant downward pressure on international financial markets, this paper aims at finding the potential tie between stock markets volatility and increasing crude oil prices based on the timeline of this regional conflict and analyses the logic behind the relationship, using evidence from the UK and China as well as VAR and ARMA-GARCH models. The findings show that in terms of the fundamentals of stock market operations, in the short period following the outbreak of the Russia-Ukraine conflict, accompanied by a surge in oil prices, both in the UK and China markets, stock markets fluctuated dramatically and moved downwards rapidly over a short period of time. However, over time it is not possible to intuitively judge the medium to long-term impact on equity markets of the rise in oil prices caused by this situation. For policy makers, there is a package of monetary, fiscal and tax policies that can be implemented to counter the externalities caused by the Russia-Ukraine conflict. It is worth noting, however, that any policy has a corresponding cost. For investors, investment behavior depends on one's level of risk appetite, but the general advice is to avoid relevant investments in the short term in the event of an outbreak of the Russia-Ukraine conflict.


Download data is not yet available.


Casualties of the Russo-Ukrainian War - Wikipedia., 2022. (2022) [2022 -07 -31].

Liadze I, Macchiarelli C, Mortimer-Lee P, et al. The economic costs of the Russia-Ukraine conflict. NIESR Policy Paper, 2022, 32.

GDP impact of trade restrictions with Russia by country 2022 | Statista. Statista, 2022. (2022) [2022-07-31].

Yousaf I, Patel R, Yarovaya L. The reaction of G20+ stock markets to the Russia-Ukraine conflict. Available at SSRN, 2022. DOI:

Mbah R E, Wasum D F. Russian-Ukraine 2022 War: A review of the economic impact of Russian-Ukraine crisis on the USA, UK, Canada, and Europe [J]. Advances in Social Sciences Research Journal, 2022, 9(3): 144-153. DOI:

Li Y, M Alshater M, Yoon S M. The Impact of Russia-Ukraine Conflict on Global Financial Markets. Available at SSRN 4108325, 2022. DOI:

Yahoo Finance. Available at

Ahmed S, Hasan M, Kamal M R. Russia‐Ukraine crisis: The effects on the European stock market[J]. European Financial Management, 2022. DOI:

Federle J, Meier A, Müller G J, et al. Proximity to War: The stock market response to the Russian invasion of Ukraine. 2022. DOI:

Adekoya O B, Oliyide J A, Yaya O S, et al. Does oil connect differently with prominent assets during war? Analysis of intra-day data during the Russia-Ukraine saga. Resources Policy, 2022, 77: 102728. DOI:

Cheung Y W, Lai K S. Lag order and critical values of the augmented Dickey–Fuller test[J]. Journal of Business & Economic Statistics, 1995, 13(3): 277-280. DOI:

Tang H, Chiu K C, Xu L. Finite mixture of ARMA-GARCH model for stock price prediction [C]//Proceedings of the Third International Workshop on Computational Intelligence in Economics and Finance (CIEF'2003), North Carolina, USA. 2003: 1112-1119.

Han H. Asymptotic properties of GARCH-X processes. Journal of Financial Econometrics, 2015, 13(1): 188-221. DOI:

Akaike H. Fitting autoregressive models for prediction. Annals of the institute of Statistical Mathematics, 1969, 21(1): 243-247. DOI:

Caruana J. Systemic risk: how to deal with it? 2010.

Brown S P A, Yücel M K. Energy prices and aggregate economic activity: an interpretative survey. The Quarterly Review of Economics and Finance, 2002, 42(2): 193-208. DOI:

Gollier C. Misery loves company: Equilibrium portfolios with heterogeneous consumption externalities. International Economic Review, 2004, 45(4): 1169-1192. DOI:




How to Cite

Liu, H. (2022). The Yield and Volatility of Financial Markets in the UK and China under the Russia-Ukraine Conflict. BCP Business & Management, 32, 83–91.