The relationship between macroeconomic variables and stock market in Malaysia / Mu'Ain Adli Abqari Fazli

Many macroeconomist theorists agrees that stock market performance is driven by different macroeconomic factors. Macroeconomic variables and stock market has a systematic effect on stock market returns. Stock market also will give the ability to access capital for company and investor if the stock market is good in providing support for economic development. Thus, this paper is to investigate the relationship between macroeconomics variables and stock market in Malaysia for the period of 2010 to 2021 by monthly data. This study has set five independent variables which are GDP growth rate, Interest rate, Inflation rate (consumer price index), Unemployment rate and Balance of trade. The dependant variable is FTSE Bursa Malaysia KLCI Index. The data collected is a secondary data. The dataset for this study consists of observations of one country which is Malaysia at numerous time intervals. This analysis used time series and the analysis are used is Descriptive Analysis, Covariance Analysis, Correlation Analysis, Multicollinearity analysis and Regression Analysis. Findings from this paper conclude that GDP growth rate have a negative relationship with the stock market. Next, Interest rate is having a positive relationship with stock market. Furthermore, the inflation rate (consumer price index) has positive correlation with stock market. Besides, there would be no stable long-term relationship between unemployment rate and stock markets. Lastly, balance of trade has a negative relationship between stock market.