Impact of Macroeconomics Variables on Stock Prices: Empirical Evidence in Case of KSE

8 Pages Posted: 28 Sep 2010

See all articles by Sulaiman D. Muhammad

Sulaiman D. Muhammad

Federal Urdu University of Arts Science & Technology

Adnan Hussain

Benazir Bhutto Shaheed University, Lyari, Karachi; University of Karachi - Applied Economics Research Centre

Adnan Ali

University of Karachi

M. Anwar Jalil

KASB Institute of Technology (KASBIT)

Date Written: 2009

Abstract

The purpose behind this study is to explore the correlation among the macroeconomics variables and share prices of KSE (Karachi Stock Exchange) in context of Pakistan. The study considers several quarterly data for different macroeconomics variables are as foreign exchange reserve, foreign exchange rate, industrial production index (IPI), whole sale price index (WPI), gross fixed capital formation (GFCF) and broad money M2.

These variables are obtained from the period 1986-2008. The result shows that after the reforms in 1991 the influence of foreign exchange rate and foreign exchange reserve significantly affect the stock prices, while other variables like IPI and GFCF are insignificantly affect stock prices. The result also highlighted the internal factors of firm like increase in production and capital formation insignificant while external factor like M2 and foreign exchange affect positively. The study will be very helpful for national policy makers, researchers and corporate managers.

Keywords: Stock prices, Macroeconomics variables

Suggested Citation

Muhammad, Sulaiman D. and Hussain, Adnan and Ali, Adnan and Jalil, M. Anwar, Impact of Macroeconomics Variables on Stock Prices: Empirical Evidence in Case of KSE (2009). Available at SSRN: https://ssrn.com/abstract=1683357 or http://dx.doi.org/10.2139/ssrn.1683357

Sulaiman D. Muhammad

Federal Urdu University of Arts Science & Technology ( email )

Sector G-7/1, Main University Road
Gulshan-e-Iqbal
Karachi, Sindh 744000
Pakistan

Adnan Hussain

Benazir Bhutto Shaheed University, Lyari, Karachi ( email )

Faqir Mohammad Dura Khan Road,
Near cheel chowk
Karachi, Sindh 75500
Pakistan

HOME PAGE: http://www.bbsul.edu.pk

University of Karachi - Applied Economics Research Centre ( email )

Mail University Road
Karachi University
Karachi, SC Sind 75270
Pakistan

Adnan Ali

University of Karachi ( email )

University Road
Karachi, PA Sindh 75270
Pakistan

M. Anwar Jalil (Contact Author)

KASB Institute of Technology (KASBIT) ( email )

Karachi
Pakistan

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