Macroeconomic Impact on Energy Sector in ASEAN

Rizza Aufa Shidqi () and Nora Amelda Rizal
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Rizza Aufa Shidqi: Telkom University, School of Economics and Business
Nora Amelda Rizal: Telkom University, School of Economics and Business

A chapter in Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), 2024, pp 272-291 from Springer

Abstract: Abstract Global conditions significantly impact the global economy, influencing oil prices, interest rates, and exchange rates, which in turn affect stock prices. Climate change has become a central concern, prompting a shift towards renewable energy production. However, Southeast Asia’s energy sector remains the largest regional contributor to greenhouse gas emissions. This study investigates the impact of carbon prices, Brent oil prices, palm oil prices, interest rates, and exchange rates on energy sector stock returns in ASEAN, over the short and long term. The study focuses on six ASEAN stock markets from 2017 to 2022, employing panel data and the Vector Error Correction Model (VECM). The findings reveal that carbon prices, Brent oil prices, palm oil prices, and exchange rates positively affect energy sector stock returns, while interest rates show no effect. Simultaneously, all factors combined influence stock returns. In the short term, carbon prices negatively affect returns, while Brent oil prices, palm oil prices, interest rates, and exchange rates have positive effects. Long-term analysis shows that only carbon prices negatively impact returns. These results highlight the influence of macroeconomic factors on capital markets, emphasizing the need for capital market players to understand these dynamics, particularly in the energy sector, and underscores the importance of transitioning to renewable energy to support sustainable development goals (SDGs).

Keywords: Capital Market; Carbon Emission; Energy Commodity; Green Investment; Stock Returns in Energy Sector (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-558-4_16

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DOI: 10.2991/978-94-6463-558-4_16

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