ISSN: 2222-6990
Open access
KLCI is a prominent stock exchange in Malaysia that tracks the performance of firms. It has gained the attention of investors since it can influence investment decisions for investors and corporations alike. This research studies the influence of money supply, oil prices, and exchange rates on the Kuala Lumpur Composite Index (KLCI). The study examines the link between the KLCI, money supply, oil prices, and exchange rates. This analysis also employed three independent variables: the money supply (M.S.), the oil price (O.P.), and the exchange rate (E.R.). Multiple linear regression techniques are applied in this research using monthly data. In addition, the normality test, descriptive analysis, regression analysis, and Augmented Dickey Fully (A.D.F.) root of unit tests are used to determine the relationship between variables. These sources provided the information: Refinitiv Eikon Datastream, Yahoo Finance, Trading Economics, and Bursa Malaysia. Specifically, the data collected between July 2012 and July 2020 will be analyzed with E-Views 11. According to the results, every independent variable influences the KLCI. However, neither the money supply nor the exchange rate was significantly impacted. Only money supply (M.S.) demonstrated a negative correlation with the KLCI. However, oil prices (O.P.) substantially impact the KLCI. This element contributes to the high performance of the KLCI. Future research should increase understanding and generate more consistent outcomes by experimenting with various data architectures and incorporating other macroeconomic variables.
Adam, A. M., & Tweneboah, G. (2008). Macroeconomic factors and stock market movement: Evidence from Ghana. Available at SSRN:
https://ssrn.com/abstract=1289842
Adu, D. A. (2012). Effect of macroeconomic variables on stock market returns Ghana: An analysis using Arbitrage Pricing Model. Institute of Distance Learning, KNUST.
Al-hajj, E., Al-Mulali, U., & Solarin, S. A. (2018). Oil price shocks and stock returns nexus for Malaysia: Fresh evidence from nonlinear ARDL test. Energy Reports, 4, 624–637.
Bahmani-Oskooee, M., & Saha, S. (2019). On the effects of policy uncertainty on stock prices: An asymmetric analysis. Quantitative Finance and Economics, 3(2), 412-424.
Chang, B. H., Rajput, S. K. O., & Bhutto, N. A. (2019). Impact of exchange rate volatility on the U.S. exports: A new evidence from multiple threshold nonlinear ARDL model. Journal of International Commerce, Economics and Policy, 10(02), 1950009-1-1950009-26.
Chen, N. F., Roll, R., & Ross, S. A. (1986). Economic forces and the stock market. Journal of business, 59(3), 383-403.
Chia, R. C. J., & Lim, S. Y. (2015). Malaysian stock price and macroeconomic variables: Autoregressive Distributed Lag (ARDL) bounds test. Kajian Malaysia, 33(1), 85-103.
Davoudi, S., Fazlzadeh, A., Fallahi, F., & Asgharpour, H. (2018). The impact of oil revenue shocks on the volatility of Iran's stock market return, International Journal of Energy Economics and Policy, 8(2), 102-110.
DiMartino, D., & Duca, J. (2007). The rise and fall of subprime mortgages. Economics Letters, 2(11), 1-8.
Garcia, V. F., & Liu, L. (1999). Macroeconomic determinants of stock market development. Journal of applied Economics, 2(1), 29-59.
Gay, R. D. (2008). Effect of macroeconomic variables on stock market returns for four emerging economies: Brazil, Russia, India, and China. International Business & Economics Research Journal, 7(3), 1-8.
Hatemi-J, A., Al Shayeb, A., & Roca, E. (2016). The effect of oil prices on stock prices: Fresh evidence from asymmetric causality tests. Applied Economics, 49(16), 1584–1592.
Ibrahim, M. (1999). Macroeconomic variables and stock prices in Malaysia: An empirical analysis. Asian Economic Journal, 13(2), 219-231.
Queku, I. C., Gyedu, S., & Carsamer, E. (2020). Stock prices and macroeconomic information in Ghana: Speed of adjustment and bi-causality analysis. International Journal of Emerging Markets, 17(1), 47-70
Khalid, W., & Khan, S. (2017). Effects of macroeconomic variables on the stock market volatility: The Pakistan experience. Global Journal of Management and Business Research, 17(4), 68-91.
Kibria, U., Mehmood, Y., Kamran, M., Arshad, M. U., Perveen, R., & Sajid, M. (2014). The impact of macroeconomic variables on stock market returns A case of Pakistan. Research Journal of Management Sciences, 3(8), 1-7.
Kisswani, K. M., & Elian, M. I. (2017). Exploring the nexus between oil prices and sectoral stock prices: Nonlinear evidence from Kuwait stock exchange. Cogent Economics & Finance, 5, 1-17.
Kose, Y., Doganay, M., & Karabacak, H. (2010). On the causality between stock prices and exchange rates: Evidence from Turkish financial market. Problems and Perspectives in Management, 8(1).
Liang, C. C., Troy, C., & Rouyer, E. (2020). U.S. uncertainty and Asian stock prices: Evidence from the asymmetric NARDL model. The North American Journal of Economics and Finance, 51, 1-26.
Linck, L., & Decourt, R. F. (2016). Stock returns, macroeconomic variables, and expectations: Evidence from Brazil. Pensamiento & Gestión, 40, 91-112.
Marashdeh, H., & Afandi, A. (2017). Oil price shocks and stock market returns in the three largest oil-producing countries. International Journal of Energy Economics and Policy, 7(5), 312-322.
Moussa, F., & Delhoumi, E. (2021). The asymmetric impact of interest and exchange rate on the stock market index: Evidence from MENA region. International Journal of Emerging Markets.
Ouma, W. N., & Muriu, P. (2014). The impact of macroeconomic variables on stock market returns in Kenya. International Journal of Business and Commerce, 3(11), 1-31.
Ozcelebi, O., & Yildirim, N. (2016). Exchange rate and stock prices: How do they Interact in Eastern Europe? Argumenta Oeconomica, 1(36), 31-65.
Najaf, R., & Najaf, K. (2016). A study of exchange rates movement and stock market volatility. Asian Journal of Management, Engineering & Computer Sciences, 1(1), 32-38.
Norehan, M. A. H., & Ridzuan, A. R. (2020). The impact of macroeconomics variables on the stock market in Malaysia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(1), 360–367.
Shafi, K., Hua, L., Idrees, Z., & Nazeer, A. (2015). Oil prices & stock market: Evidence from K.S.E. & B.S.E. American Journal of Business, Economics, and Management, 3(2), 40-44.
In-Text Citation: (Mohamed et al., 2022)
To Cite this Article: Mohamed, S., Bakri, N. S. M., Ibrahim, W. M. F. W., Nasrul, F., Noh, M. K. A., Isa, M. A. M., & Hassan, S. S. (2022). The Relationship between Money Supply, Exchange Rates and Oil Prices with KLCI’s Price. International Journal of Academic Research in Business and Social Sciences, 12(10), 1538 – 1550.
Copyright: © 2022 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non0-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode