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The Effect of Macroeconomics on Stock Price Index in the Republic of China

Endang Mahpudin

International Journal of Economics & Business Administration (IJEBA), 2020, vol. VIII, issue 3, 228-236

Abstract: Purpose: This study examines the influence of inflation, exchange rates, interest rates, and money circulation on share prices in China. The macroeconomics of a country has always impacted share prices in the stock markets, which are vital indicators often used by investors in determining the country's macroeconomic stability for investment decisions. Design/Methodology/Approach: The study elicits descriptive quantitative analysis to determine the nature of the influence of the research variables on stock prices. Findings: The study found that inflation and money supply affect the Stock Price Index in China, while the exchange rate and interest rate variables do not significantly impact. Practical Implications: The pattern of influence in China is different from other research conducted in other emerging economies and developed economies. However, the differences between markets in developed countries and emerging economies, such as high volatility in the case of developing economies’ markets, signal frequent macroeconomic changes. Originality/Value: A definitive mapping of stock markets’ behavior, especially in emerging economies, remains elusive despite several previous studies. This study draws attention to the importance of comparatively studying stock markets in developed and emerging economies to produce findings that can be used in the economy's macroeconomic spectrum.

Keywords: Macroeconomics; stock prices; inflation; China. (search for similar items in EconPapers)
JEL-codes: G20 G23 N20 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:3:p:228-236