The influence of macroeconomic variables on Malaysian stock market performance (a test on money supply, exchange rate and employment rate) (1998-2006) / Husna Syafeeqa @ Prisca Hamdan

Much has been said about the relationship between macroeconomic variables and the performance of stock market. Do these economic variables really affect the stock market performance? Thus, the purpose of this paper attempts to find the answer. This paper explores influence of macroeconomic variables toward the stock market performance by utilizing Regression, Anova and Pearson Correlation. The sample period is from 1998 until 2006, a period after the Malaysian economy has recovered from a recurrence of the 1997-98 Asian economic crisis. In this research, the Malaysian stock market has been chosen as a dependent variable and money supply, exchange rate and employment rate as the independent variables. The outcomes from the Regression and Pearson Correlation suggest that the macroeconomic variables (money supply, exchange rate and employment rate) influence the stock market performance at definite level of strength. The major findings are:(i) Money Supply is the most overwhelming determinant of stock market performance, (ii) Employment Rate is also the predominant force on the performance of stock market (iii) Exchange Rate is the weakest impact on stock market performance.