The impact of macroeconomic factors on the emerging stock markets performance: evidence from selected countries

The purpose of the study is to explore the relationship between macroeconomic factors (Interest rate, Exchange rate, Inflation, GDP and Money supply) and the emerging stock market through the evidence of selected 13 emerging stock markets over the past 20 years period from 1997 to 2016. The yearly data is collected from Thomson Data Stream. Through a series of regression analysis and diagnostic tests, the fixed effect model with robust standard error is found to be the most appropriate. The findings show that interest rate, exchange rate and money supply have significant relationship with the emerging stock markets. The increase of interest rate will inversely affect the change of stock market indices. The exchange rate and money supply move in the same direction with the emerging stock market indices. Meanwhile, consumer price index (CPI) and GDP have no significant relationship with the emerging stock market indices.