How Did the Stock Exchange Respond to Geopolitical Events? Evidence from the Former Yugoslav Republics

The start of the war in Ukraine on February 24, 2022 had a number of adverse financial impacts on markets and the world economy. Given that there is currently a lack of sufficient empirical evidence on the real effects of the conflict in Ukraine on financial markets, the aim of the paper is to determine the difference between the total market capitalization, before and after the start of the war conflict in Ukraine, on the capital markets of the former Yugoslav republics. To determine the significance of the difference, the Paired Sample t-test was used. The obtained results indicated that the difference between the total market capitalization on the Macedonian Stock Exchange is negative, but not statistically significant, on the Zagreb and Serbian Stock Exchanges it is positive and statistically significant, while on the Sarajevo Stock Exchange, the Montenegro Stock Exchange AD Podgorica and the Ljubljana Stock Exchange this difference is negative and statistically significant. significant. Such findings point to the conclusion that in times of crisis, investors should think about the possibilities of applying different hedging and diversification strategies.