The Impact of Macroeconomic Variables on Stock Prices in Kuwait

Abstract

The Kuwaiti Stock Exchange was established in April 1977 and is among the oldest stock exchanges in the GCC countries. This study aims to add new evidence about the impact of macroeconomic factors on the Kuwaiti Stock Exchange. It examines empirically the dynamic relationship between the Kuwaiti Stock Exchange Index and the main macroeconomic variables. These variables included M2, the three-month deposit interest rate, oil prices, the US Dollar vs Kuwaiti Dinar exchange rate and the inflation rate. By applying the Johansen cointegration test, together with the Var Error Correction Model (VECM), the study found that there a long-run unidirectional relationship exists between the Kuwaiti Stock Exchange Index and the aforementioned macroeconomic variables. This study also confirmed the existence of a short-run relationship between oil prices and stock prices in Kuwait.

Relationship between firm return and stock price volatility of listed commercial banks in Dar Es Salaam stock exchange

“…Standard deviation of share price [9] Firm return Cost of Investment = Net income/Cost of investment × 100 [9] 4. Results and discussion…”

“…Al-Kandari and Abul [9] further state that the capital market is undervalued because it cannot sustain a major increase that has a substantial impact on share prices. Tanzania and other poor countries do not have many new advancements in the principles of microeconomics.…”

“…Tanzania and other poor countries do not have many new advancements in the principles of microeconomics. Throughout the economic spectrum, changes in microeconomic variables have a variety of effects [9,10] . Changes in microeconomic variables can have a significant impact on stock market values because depositors can expect a different return when they capitalise on shares [11] .…”