Lessons from the Russia–Ukraine war: portfolio optimisation in cryptos and stocks for investors in Ghana

The Russia–Ukraine conflict has once again highlighted the need for diversification across asset classes to avoid the fallout of black swan events. This study aims to identify the optimal portfolio weights for long-only investors in emerging Ghana stocks and two major cryptocurrencies: Bitcoin and Ethereum. BEKK-GARCH (1, 1) has been deployed to investigate the volatility spillover between the Ghana Stock Exchange (GSE) and two major cryptos by market share: Bitcoin and Ethereum between January 2019 and December 2021. The influence of the COVID-19 crisis has been examined by dividing the full sample period into three sub-periods: pre-COVID-19, duringCOVID-19 and post-COVID-19 pandemic. This study has several important implications. First, the investors can take advantage of higher returns in cryptos by allocating low-single digits exposure and enhancing portfolio risk-adjusted returns. Second, policymakers can formulate policies to encourage more investors to adopt cryptos as an asset class in Ghana.