• Tay Bee Hoong Universiti Teknologi MARA
  • Erma Zulaikha Omar Universiti Teknologi MARA
Keywords: Stock prices, Balance of trade, Interest rate


Stock price is one of the most important leading indicators in the economy. It can be affected by a many factors including volatility of the market, current economic conditions and popularity of the company. Thus, stock price is an essential determinant of a country’s economic growth. The purpose of conducting this study is to examine the relationship between stock prices and selected variables namely exchange rate, inflation rate, interest rate, money supply, balance of trade, disposable income and gross domestic products. Quarterly data are used in this study ranges from 1999 to 2011. The statistical method used in this study is the multiple linear regression which is used in determining the relationship between dependent variable and independent variables. The findings of this study show that there are positive relationship between stock prices of the Kuala Lumpur Composite Index (KLCI) with the balance of trade and interest rate. This study emphasizes on the effects of selected variables toward the stock prices.


Download data is not yet available.


Alam, M.M., & Uddin, M.G.S. (2009). Relationship between Interest Rate and Stock Price: Empirical Evidence from Developed and Developing Countries. International Journal of Business and Management, 4(3), 43–51.

Anthony, K.C. & Kwame, F.A. (2008). Impact of macroeconomic indicators on stock market performance. Journal of Risk Finance, 9(4), 365‒378.

Apergis, N., & Eleftheriou, S. (2001). Interest rates, inflation and stock prices: the case of the Athens Stock Exchange. Journal of Policy Modeling, 24, 231–236.

Fischer, S., & Merton, R.C. (1984). Macroeconomics and finance: The role of the stock market. National Bureau of Economic Research, Revised January 1984.

Garcia, V.F. (1999). Macroeconomic determinants of stock market development. Journal of Applied Economics, Vol. 2 (1), 29‒59.

Ibrahim, M.H., & Aziz. H. (2003). Macroeconomic variables and the Malaysian equity market: A view through rolling subsamples. Journal of Economic Studies, Vol. 30 (1), 6-27.

Imran, A., Kashif, U.R., Ayse, K.Y., Muhammad, A.K. & Hasan, A. (2010).Causal relationship between macro-economic indicators and stock exchange prices in Pakistan. Journal of Business Management, Vol. 4 (3), 312‒319.

Khaled, H. & Le, K.N. (2009). The impact of macroeconomic indicators on Vietnamese stock prices. Journal of Risk Finance, Vol. 10 (4), 321–332.

Merikas, A.G., & Merika, A.A. (2006). Stock prices response to real economic variables: the case of Germany. Journal of Managerial Finance, Vol 32 (5), 446–450.

Mukherjee, T.K., and Naka, A. (1995). Dynamic relations between macroeconomic variables and the Japanese stock market: an application of a vector error-correction model. The Journal of Financial Research, Vol 18, No 2, 223‒237.

Nisa, M., & Nishat, M. (2007). The Determinants of Stock Prices in Pakistan. Asian Economic and Financial Review, 1(4), 276–291.

Nishat, M., and Shaheen, N. (2004). Macroeconomic factors and Pakistani equity market. The Pakistan Development Review, 43(4) Part II, 619‒637.

Pal, K., & Mittal, R. (2011). Impact of macroeconomic indicators on Indian capital markets. Journal of Risk Finance, Vol. 12 (2), 84–97.

Rjoub, H., Tursoy, T., & Gunsel, N. (2009). The effects of macroeconomic factors on stock returns: Istanbul stock market.Studies in Economics and Finance, Vol. 26 (1), 36‒45.

Ross, S. (1976). The Arbitrage Theory of Capital Asset Pricing. Journal of Economic Theory, 13(2), 341–360.

Tsoukalas, D. (2003). Macroeconomic factors and stock prices in the emerging Cypriot equity market. Journal of Managerial Finance, Vol. 29 (4), 87‒92.

Wickremasinghe, G. (2011). The Sri Lankan Stock Market and the Macroeconomy: An Empirical Investigation. Journal of Economics and Finance, Vol. 28 (3), 179–195.

Zhao, H. (2010). Dynamic relationship between exchange rate and stock price: Evidence from China. Journal of International Business and Finance, Vol. 24, 103‒112.
How to Cite
Bee Hoong, T., & Zulaikha Omar, E. (2019). AN INVESTIGATION OF STOCK PRICE DETERMINANTS: CASE OF MALAYSIA. Journal of Contemporary Issues and Thought, 3, 105-113. Retrieved from