Macroeconomic Variables and Its Impact on Kse-100 Index
Macroeconomic Variables & Its Impact on KSE -100 index
MACROECONOMIC VARIABLES & ITS IMPACT ON KSE -100 INDEX BY MUHAMMAD SALMAN KHAN
ABSTRACT
Stock exchange or secondary market plays pivotal role of an economy. From it one can easily guess the overall economy of the county. From various factors, stock market is dependent and the impacts of these factors are clearing i.e. positive or negative. Macroeconomic variables in economy that influence the stock exchange and macroeconomic variables that affect the stock prices of any state are Government policies, exchange rates, inflation, money supply, interest rate, foreign direct investment, law & order situation, political instability, security problems (terrorist attacks) Gross domestic product growth rate, judiciary crises. Foreign AID is also incredibly vital for the economy of Pakistan and stock market. For this purpose to find out the impact of macroeconomic variables on stock exchange, four unlike variables are supposed to study i.e. exchange rates, interest rates, inflation and GDP (Gross domestic product). Year on year data of 19 consecutive years acquired for the research. For concluding results, statistical tools i.e. multiple regressions and Pearson’s correlation models are used. The study shows (80%) variation in the dependent variable has explained by the independent variable. Therefore, the model is good fitted and there is a strong relationship between dependent and independent variables, variation in the stock prices explained up to (80%) by the variation in the independent variables. The study result shows direct and positive correlation between macroeconomic variables like exchange rate, inflation and GDP (Gross domestic product) growth rate with stock prices of KSE-100 index while negative impact found on the stock prices of KSE-100 index of the interest rate.
INTRODUCTION
Impacts of micro and macroeconomic variables were extremely significant for the researchers in olden times. Researchers,
MACROECONOMIC VARIABLES & ITS IMPACT ON KSE -100 INDEX BY MUHAMMAD SALMAN KHAN
ABSTRACT
Stock exchange or secondary market plays pivotal role of an economy. From it one can easily guess the overall economy of the county. From various factors, stock market is dependent and the impacts of these factors are clearing i.e. positive or negative. Macroeconomic variables in economy that influence the stock exchange and macroeconomic variables that affect the stock prices of any state are Government policies, exchange rates, inflation, money supply, interest rate, foreign direct investment, law & order situation, political instability, security problems (terrorist attacks) Gross domestic product growth rate, judiciary crises. Foreign AID is also incredibly vital for the economy of Pakistan and stock market. For this purpose to find out the impact of macroeconomic variables on stock exchange, four unlike variables are supposed to study i.e. exchange rates, interest rates, inflation and GDP (Gross domestic product). Year on year data of 19 consecutive years acquired for the research. For concluding results, statistical tools i.e. multiple regressions and Pearson’s correlation models are used. The study shows (80%) variation in the dependent variable has explained by the independent variable. Therefore, the model is good fitted and there is a strong relationship between dependent and independent variables, variation in the stock prices explained up to (80%) by the variation in the independent variables. The study result shows direct and positive correlation between macroeconomic variables like exchange rate, inflation and GDP (Gross domestic product) growth rate with stock prices of KSE-100 index while negative impact found on the stock prices of KSE-100 index of the interest rate.
INTRODUCTION
Impacts of micro and macroeconomic variables were extremely significant for the researchers in olden times. Researchers,