Stock Market Volatility and Industrial Financial Resilience: Evidence from Asia

Abstract

The agenda of integrating industrialization and downstream processing to achieve global economic resilience requires stable financial performance from industrial firms involved. However, efforts to maintain such stability are increasingly vulnerable to macroeconomic uncertainty and stock market volatility as a primary source of financing. This study employs GARCH and TGARCH models to forecast stock market return volatility across Asian markets in order to map systemic risks affecting the investment climate in the manufacturing sector. Based on observations of 11 Asian stock indices over the period 2004–2024, heteroskedasticity testing was conducted, resulting in seven major indices as the final sample (Hang Seng, JKSE, Nifty 50, Nikkei 225, SET, TAIEX, and VNI). The findings indicate that all sampled markets exhibit volatility clustering characteristics. Markets in Japan, Thailand, and Taiwan demonstrate faster volatility recovery, indicating a more resilient environment for industrial financing. In contrast, Hong Kong, India, Indonesia, and Vietnam exhibit high volatility persistence. TGARCH testing reveals the absence of asymmetric effects in the Indonesian, Taiwanese, and Vietnamese markets. Forecasting results for the 2024–2029 period project Japan as the most stable market, while Vietnam is expected to face persistent volatility risks. This volatility analysis is crucial for industrial firm management in formulating risk mitigation strategies to ensure sustainable financial performance amid rapid global industrialization.