Journal of Business & Financial Affairs

The Influence of Macroeconomic Factors on Stock Markets Performance in Top SAARC Countries and China

Abstract

Muhammad Abdul Kabeer*

“In global world the investment in capital market plays a vital role of an economy especially in emerging countries”. The researcher found the influences of three independent economic variables i.e., foreign exchange, foreign direct investment and inflation (CPI) at SAARC countries and China and comparison of these results into two groups with high frequency monthly data of all dependent and independent variables, since last five years practice data obtain from various authentic sources. To reach these research objectives author uses the ordinary least square (OLS) to estimate the Pearson's correlation coefficient and multiple regression models. And results show that in first group, significant (positive) influences by foreign exchange & inflation while FDI has insignificant (negative) influences on stock market return in Bangladesh. And in Pakistan, foreign exchange and inflation have significant (negative) influences while FDI has insignificant (positive) influences on stock market return. In Sri Lanka significant (positive) influences by foreign exchange while FDI and inflation have significant (negative) influences on stock market return. In second group, India and China both have significant (negative) influences by foreign exchange and inflation while FDI has insignificant (positive) influences on stock market return. The high value of R² show that variations in all independent variable have explained the all countries capital markets in all models. All-encompassing model admirable by probability of F-statistics which 95% of interval confidences. There are no serial correlation issues in all models by Durbin-Watson statistics value.