The impact of macroeconomic variables towards stock market development in Malaysia / Mohd Izuan Rosmi

This paper aims at finding out the effect of Macroeconomic Variables to the Malaysian Financial Sector Stock Returns Index or officially known as Bursa Malaysia Finance Index. The variables considered are Inflation (GDP), money supply (MS) and interest rate (IR}. The sample of this study comprises of 41 observations each of the independent and dependent variables on a yearly basis over 40 years period from January 1979 to December 2019. Methodology used for this study is by using Multiple Regression Analysis with time series data sourced from World Data Index, lndex Mundi and Data Statistics Malaysia. Thereafter, econometric tests are to be conduct to observe the relationship of the macroeconomic variables to the Bursa Malaysia Finance Index. Interactive software package E-view would be use for testing and analysing the data collected. The study is an attempt to investigate the relationship of the chosen macroeconomic variables towards influencing Bursa Malaysia Finance Index (SM}. Findings from previous research papers mostly on developed markets indicate that macroeconomic variables do play a significant role in the determination of stock returns. The results of this research paper would provide us with an indicative view and could form an important basis for investors and policy makers in their investment strategies and policy decisions respectively.