Title: Stock market movement and macroeconomic influences: evidence from Saudi Arabia

Authors: Emmanuel Okey Ntui

Addresses: College of Business Administration, Prince Mohammad Bin Fahd University, P.O. Box 1664, Khobar 31952, Saudi Arabia

Abstract: This paper examines the dynamic relationship between stock price-movement and selected macroeconomic variables of Saudi Arabia by adopting the cointegration methodology. The monthly data on the Tadawul all-share price index, consumer price index, net foreign direct investment and deposit (discount) rates from January 2000 to December 2011 are used for this empirical investigation. Specifically, this paper focuses on the analysis of the long-run equilibrium and short-run multivariate causality between these variables and forecast stock market movement. An accurate estimation of the relationship between the stock market behaviour and economic variables as well as the forecast stock movement enables both local and global investors to make effective investment decisions. Similarly, for the policy makers, a precise prediction of this type of relationship and forecast movement of stock prices may help government monetary agencies and other institutions in designing policies to attract more capital inflows into an emerging economy of Saudi Arabia's capital market.

Keywords: microeconomic variables; Tadawul all-share market index; TASI; cointegration; foreign direct investment; FDI; Saudi Arabia; stock market movements; macroeconomic influences; stock markets; stock prices; investment decisions; capital inflows; emerging economies.

DOI: 10.1504/JIBED.2012.049798

Journal for International Business and Entrepreneurship Development, 2012 Vol.6 No.3/4, pp.224 - 243

Received: 08 May 2021
Accepted: 12 May 2021

Published online: 15 Oct 2012 *

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