In general, Malaysia stock market contributes to the best allocation of capital resources
among numerous users. The roles of the stock market are mainly to facilitate and encourage the mobilization of funds, direct them towards efficient economic activities, provide adequate liquidity for investors and encourage the creation of large-scale enterprises, The Kuala Lumpur Stock Exchange Index (CI) is the most popular indicator of the Kuala Lumpur stock market performance. The CI represents share prices of 100 Corporations. These companies are chosen because their operations cover a broad spectrum of economic performance in Malaysia and more significantly reflect stock market activities with fair accuracy, Stock prices depend on the supply and demand for the stock, it causes by the factors that stock prices to be more volatile is limited supply of new issues despite of strong demand for the stocks. This restriction of supply leads to more price fluctuations, which are common to all stock markets. However, two things prevent an infinite price increase in the stock market. Firstly, the amount of money available in any country is finite. As the bull market proceeds, more and more of the country’s savings are invested in the stock market and eventually the people involved might face liquidity...
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...economic variables for emerging economies. At all, the studies have shown the existence of a weak form of market efficiency among the EMFs for respective periods of study and countries. Recently the studies done examine the cointegration between macroeconomic variables and stock prices in order to test for the informational efficient market hypothesis. All the studies are covering on the period before the financial crises in July 1997. However, there is no attempt to study the cointegration between the variables and the stock market after the financial crisis.
Hence, this study investigate the relationship between stock market returns and underlying macroeconomic variables, for the Malaysia as country known as a member of ASEAN for the period after the Asian financial crises, to determine whether or not the weak form of market efficiency to exist in Malaysia.
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