Transformation of investor attitude towards financial markets: A perspective on the Russia–Ukraine conflict

Abstract The ongoing conflict between Russia and Ukraine has significantly affected global financial markets, requiring investors to adapt their attitudes accordingly. This study aims to explore the transformation of investor attitudes towards financial markets within the context of the Russia–Ukraine conflict. By analysing monthly data spanning from January 2021 to March 2023, including Standard and Poor 500 index, Bitcoin historical price, gross national income, US consumer price index and investor attitude index, various models such as regression, the vector error correction model, generalized autoregressive conditional heteroskedasticity and the granger causality model are utilized. The findings reveal a noteworthy and positive impact of investor attitude on returns in both markets. Positive investor sentiment is linked to higher returns and enhanced market confidence. Particularly, investor attitude's influence is particularly pronounced during wartime, as global net income exerts a significant negative effect on both markets. These findings emphasize the necessity of evaluating the financial health of industrial companies prior to making investment decisions amidst periods of conflict. Furthermore, the results provide remarkable guidelines for policymakers and investors, underscoring the necessity of tracking the investor attitudes during wartime and acknowledging their potential impact on investment decision‐making in financial markets.