When inflation is high and commodity prices are rising on what seems like an almost daily basis, have you ever wondered how that might affect the price of stocks recently i so from this chart you can see that there doesn't appear to be a correlation between high inflation and high stock market returns. The effect of inflation on the stock market returns of the nairobi securities exchange by hakim vena d63/79688/2012 a research project submitted in partial fulfilment of the requirement for the award of the degree of master of science in finance. There is, therefore, the need to examine the impact of inflation on stock returns and its implication on investment in nigeria literature review theoretical framework the relationship between inflation rates and stock returns is based on the economic theory that postulates that inflationary pressures scrape away the. The study points out that inflation (cpi) does granger cause stock returns as inflation goes up, nominal interest rate will increase as well an increase in interest rate will affect stock returns the study also indicates stock returns do granger cause inflation (ppi) flannery and protopapadakis (2001) indicate. Between common stock returns and real economic variables like capital expenditures, industrial production, real gnp, money supply, lagged inflation and interest rates chen et al (1986) argued that the relevant economic variables that affect stock market are aggregate production, inflation, short-term. The analysis of the effect of international macroeconomic factors of exchange rate and oil price on the stock market exchange price of brazil, russia, india, and china did not reveal a significant relationship this is not unexpected, as other international and domestic macroeconomic variables (eg, production, inflation,.
The correlation and regression statistics evidenced positive and negative serial correlation the macroeconomic variables considered included broad money supply m4 (ms), bank of england base rate (intr) and consumer price index ( infr) with the aim of establishing their probable impact on stock return. 0021-9398/2004/7703-0006$1000 greg adams brigham young university grant mcqueen brigham young university robert wood university of memphis the effects of inflation news on high frequency stock returns i introduction large stock price movements result in sudden in- creases or decreases in wealth. Makers key words: stock market returns, inflation, crude oil price, exchange rate, interest rate, ghana introduction over the years, economists, financial analysts, academicians and researchers have conducted numerous researches on the impact of macroeconomic variables on stock prices in the.
The crises have tremendous impact on both economy and stock market in thailand during the crises, the inflation rate rose which resulted in higher required rate of return as well as higher stock market volatility consequently, it leaded to drop in stock prices to keep the level of price- to-equity ratio in the view of inflation. Seven macroeconomic factors including consumer price index, money market interest rate, gold price, industrial production index, oil price, foreign exchange rate and money supply are used in the study the result shows that money supply has significantly positive effect on stock return whereas the interest. Hence, in our analysis of inflation-stock prices interaction it is pertinent to examine relationship between growth and price rise from empirical standpoint monetary policy impacts on the stock market as well as ioannidis and kontonikas (2008) point out, monetary policy influences stock returns by influencing the discount rate. Multiple regression analysis with fixed effects model is then used results show that gross domestic product and exchange rate positively affect stock prices while consumer price index negatively affects stock prices the results of export, money supply m2, foreign direct investment and oil prices were insignificant.
The study examined the effect of exchange rate and inflation on stock market returns in ghana using monthly inflation and exchange rate data obtained from the bank of ghana and monthly market returns computed from the gse all-share index from january 2000 to december 2013 the autoregressive. Abstract the stock price is subject to the effects of inflation, the relationship between the two is exactly what kind of relationship has been great concern fisher effect” is discussion of the relationship between inflation and capital gains of the clear view that the inflation rate = nominal rate of return - the actual rate of return.
Economic growth and stock market especially in terms of stock prices empirical findings revealed that exchange rate and gdp seem to affect returns of all portfolios, while inflation rate, exchange rate, and money supply were having negative relationship with returns for portfolios of big and medium companies key words:. When there is uncertainty, the risk premium tends to increase, which leads to higher expected returns from the stock market let's say you put risk premium of 1 percent on top of the current inflation rate of 49 percent, so your minimum expected return must be 59 percent for you to make this kind of return. Tive relationship between real stocks returns and inflation in a study by kazi ( 2008) interest rate and industrial production index are found to be significantly associated with the australian stock market's returns in the long run ngoc and hussainey (2009) empirically examined the impact of macroeconomic factors on. The last two reasons make the inflation is a sensitive and serious problem and hard to control or put high burden on the government this paper aims to explain the impact of inflation on stock prices at the amman stock exchange by takes a random sample from the companies that listed in the market so we will use some.
Essentially, we should see a negative, and then positive, impact of money inflation on equity returns to see the above effect more clearly, consider the process of monetary inflation to issue new money, the federal reserve bank of new york purchases treasury securities (or other securities in the current. Investors, the federal reserve, and businesses constantly monitor and worry about the level of inflation inflation—the rise in the price of goods and services— reduces the purchasing power each unit of currency can buy rising inflation has an insidious effect: input prices are higher, consumers can. And real stock prices, and find that a positive relationship does exist as they conclude, the negative effects of inflation on stock prices do not disappear after controlling for output shocks this is contrary to fama's view choudhry (1998) investigates the relationship between stock returns and inflation in four high inflation.
The objective of this paper is to study the impact of conventional stock market return and volatility and various macroeconomic variables (including inflation rate , short-term interest rate, the slope of the yield curve and money supply) on islamic stock markets returns for twenty developed and emerging markets using markov. Inflation definitely has an effect on stock prices affected by inflation investors must understand the importance of inflation to stock prices to know the impact inflation will have on their investments investors who continue to invest in stocks require a higher rate of return because of the associated risk. Affect people's potential investor's investment decision which has a negative impact on the total returns on stocks in the economy at large this situation is prevalent in the nigerian economy therefore there is the need to examine the effect of inflation on stock returns and its implication on investment the fisher's hypothesis. Impact of their macroeconomic policies relating to inflation on stock market and frame inflation policies in a manner which improves stock returns while minimizing volatility investors can use this study to plan their investment strategies after considering the impact of future expected inflation on stock returns in brics.
The impact of inflation on stock prices in two sadc countries jm geyser & ga lowies over the past fifteen years, there have been economic events that had an impact on both developed and emerging stock markets exchange and the namibian stock exchange are examples of markets functioning without a physical. This paper studies the impact of the monetary policy instruments on islamic stock market index return in addition, it examines the effect of the inflation on the islamic and non-islamic stock market indices studying inflation is done to investigate whether both indices are a good hedge against inflation or not. Abstract this study is focused on reviewing macroeconomic news impact - mainly the inflation news impact- on common stock returns on one hand, previous literature finds a negative relationship between stock returns and inflation in the short term, but this relationship becomes positive in the long term also, this effect.