Investment in Malaysian Stock Market and the Inflation Rate

Abstract

The increasing concern on the rising inflation rate in Malaysia had motivated the need for the study on the investment return for the Malaysian stock market to compare against the inflation rate in Malaysia. The study had reflected towards the literature review to identify the potential pattern for the study creating the expectations to observe the positive correlation between the inflation rate and the portfolio return of the stock investment as well as the higher KLSE market index growth rate over the inflation rate in the country. With this, the resign design through the quantitative method had been introduced with reference to the application of the correlation analysis and regression analysis to test for the hypothesis for the study. In addition, the comparative analysis will be used as part of the quantitative analysis to understand the potential difference in the inflation rate against the KLSE market index growth rate. The outcome for the quantitative findings had concluded that there is very weak negative correlation being observed between the two variables, but the regression analysis failed to show any significant in the relationship between the two variables disagreeing with the previous studies. On the other hand, the KLSE market index growth had been significantly higher than the inflation rate in Malaysia suggesting that the stock investment in Malaysia could be beneficial for the investors to beat the inflation rate in Malaysia. With this, the objective of the study is being achieved with the suggestion towards the potential future research study being proposed for the future researchers.