Stock return consists of the income and the capital gains relative on an investment. The relationship between stock return and macroeconomics variable has been subject of interest among academics and practitioners. Many previous studies examining the impact of macroeconomic variables on the stock market focus on the U.S. (Fama, 1981, 1990; Campbell and Shiller, 1988; Fama and French, 1989; Chen, Roll and Ross, 1986; Abdullah and Hayworth, 1993; Cheung and Ng, 1998; Kim, 2003; Humpe and Macmillan, 2009; and others). These studies have considered Gross Domestic Products, Industrial Production Index, Money Supply, Interest Rates, Exchange Rates, Consumer Price Indexes or Inflation Rates, Foreign Stock Market Indexes, and other related variables. Their findings suggest that most of these macroeconomic variables have significant impacts on the U.S. stock market index to varying degrees.
Sharkas (2004) study the dynamic relationship between macroeconomics factors and the Jordanian (Amman) stock market using vector error correction model (VECM) (Johansen 1991). The variables are the real economic activity, money supply, inflation and interest rate. The findings indicated that there is a cointegration relationship exists between Amman stock prices and macroeconomics variables.
Maysami, Howe and Atkin (2004), examines the relationship between macroeconomics variables and Singapore’s stock market index (STI) , as well as various Singapore exchange sector indices which is finance index, property index and hotel index. They used a Johansen’s (1990) VECM model and the selected macroeconomics variable that they studied is short and long-term interest rate, industrial production, price levels and money supply. The outcome from the studies is th...
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...riables which is exchange rate, industrial production, inflation rate, and money supply. They used a monthly data from January 2000 to December 2010 using time series techniques of co-integration and vector autoregression (VAR). The result shows that there is co-integration between Islamic stock prices and related macroeconomic variables.
From the discussion above, it seems that there are a number of studies on the macroeconomic variables and its impacts on stock return. Different studies have provided different result according to the macroeconomic variable used and the research methodology employed. However, there are few studies that try to explore relationship between Islamic stock returns and macroeconomic variables in Malaysia and Indonesia. Therefore, we find interesting to investigate these effects and their relationship for Malaysia and Indonesian context.
The United States signaled a new era after the end of World War I. It was an era of hopefulness when many people invested their money that was under the mattresses at home or in the bank into the stock market. People migrated to the prosperous cities with the hopes of finding much better life. In the 1920s, the stock market reputation did not appear to be a risky investment, until 1929.First noticeable in 1925, the stock market prices began to rise as more people invested their money. During 1925 and 1926, the stock prices vacillated but in 1927, it had an upward trend. The stock market boom had started by 1928. The stock market was no longer a long-term investment because the boom changed the investor’s way of thinking (“The Stock Market Crash of 1929”). The Stock Market Crash of 1929 was a mass hysteria because of people investing without any prior knowledge and the after effects that eventually led to the Great Depression.
The events that unfolded on September 11th and the days that followed also profoundly effected the stock market. It is the purpose of this paper is to examine what happened to both the Dow Jones Industrial Average and the NASDAQ after September 11th and how it is similar to events such as the bombing of Pearl Harbor, the Oklahoma City bombing, and the Gulf War in terms of how the stock market experienced a blow and bounced back after a while.
In turn everything in the present and the future is judged through the stocks as they hold a high importance in industrialized economies showing the healthiness of said countries economy. As investing discourages consumer spending over all decreases, it lead...
The modern Islamic Finance industry is young, its timeline begin only a few decades ago. However, islamic finance is involving rapidly and continues to expend to serve a growing population of muslims as well as conventional.
Saudi Arabia’s capital market is considered to be young compared to other financial markets in the region. Saudi financial markets have been developing slowly because most enterprises in the country are either government owned or family-owned, most of which was funded through state budget, and as a result reduced the need for financing. In the recent past, Saudi Arabia has focused on a careful measurement for structural developments and regulatory changes. However, different phases of historical development of the capital market which can be classified into three phases; pre-industrialization phase, post industrialization phase and growth phase that sparked changes and shaped the kingdom 's capital market on
One of Malaysia’s more significant non-market environments that may have an impact on company’s performance is the country’s predominant religion of Muslim - 60% of the total population - followed by Buddhist (19.2%) .
Money Supply plays an important role in macroeconomic analysis, especially in selecting an appropriate monetary and fiscal policy. Considerably, I am yet to come across theoretical work that has been done on this topic (analysis money supply and its impact on other variable i.e. inflation, interest rate, real GDP and nominal GDP). However some other topics similar to this one have been done by AL-SHARKAS, Adel, where he uses the same technique and models on the topic ‘out put response to shocks to interest rate, inflation and stock returns. His work investigates the relationship between the Jordanian output and other macroeconomics variables such as inflation, interest rate and stock returns. His paper employs the VAR approach method of Lee (1992) to analyze the relation and dynamic interaction among variables. The IRF and the FEVD from the VAR model are computed in order to investigate interrelationships within the system. The empirical results indicate that Interest rate and inflation are weakly negatively correlated and real stock returns and inflation is very weakly positively correlated for all leads and lags are negatively associated. Furthermore, the response of output (IPG) to shocks in stock returns (R1) is strongly positive up to the first 6 periods and after which the effect almost dies. This indicates that the relationship between stocks returns (R1) and real activity (IPG) is positive and inflation has a negative impact on IPG (Adel A. Al-Sharkas 2004).
Mookerjee, R., and Yu, Qiao, (1997). Macroeconomic variables and stock prices in small open economy: The case of Singapore (1997) Pacific-Basin Finance Journal, vol. 5,
The leading model, Monetary Model links exchange rate movements to the balance of payment, which is used for medium to long term analysis. The following assumptions cons...
Singapore is an island and a smallest country in Southeast Asia. Singapore is one of the “Four Asian Tigers” where the world major cargo seaport occurs. Despite the small size of the nation, Singapore economy have strong international trade link with capitalist mixed economy when the government intervention in the market is minimal (Economy watch, 2011).
Choosing two profitable stocks amongst a myriad of potential alternatives is a daunting task to say the least. In order to narrow my choices from thousands to two, I examined several aspects of companies I was interested in. Among these were, company overview, alpha and beta ratings, price ratios, price charts, and company headlines. After evaluating this information, I chose Intuit INC (INTU) listed on the NASDAQ and Johnson and Johnson (JNJ) listed on the NYSE.
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
The macroeconomic environment is a dynamic environment, which could not remain unchanged (Gajewsky 2015). There are many factors influence the global macroeconomic environment, such as interest rate, exchange rate, GDP，aggregate demand, monetary policy and other macroeconomic variable (Oxelheim and Wihlborg 2008). These factors are closely associated with commodity price.
In the modern world, financial markets play a significant role, with huge volumes of everyday dealings. They form part of contemporary economic lifestyle and determine the level of success of many people. Humans have always been uncertain of what the future holds and thus, tried to forecast it. The forecast of course cannot omit the likelihood of “easy money” by forecasting the prices of equity markets in the future.
In addition, after the 2011 Singapore general election, the government of Singapore has greatly changed its economic approach and it seems to be better for the economy of Singapore so far. On the other hand, measures have also been taken to cool down the property market which has constantly affected inflation rates, also tightened the foreign labour policies that constantly influence the labour market and unfold its impacts onto the Singapore’s economy as it comes back in one round. The unemployment rate in Singapore has been maintaining itself as being one of the lowest numbers in the world. The majority of Singapore’s labour force is well educated and highly skilled. Even primary education is a must for all citizens (Economywatch.com, 2010). In addition, for the year 2010, Singapore had the 8th largest current account balance in the world at US$49.454 billion. To conclude, Singapore has come so far from its sunken economy since independence in 1965 to become a booming and prosperous economy that it is