Abstract
The Purpose of this paper is to research the determinant of fundamental factors consisting of Net Profit Margin (NPM), Return on Equity (ROE), Return on Asset (ROE), Earning per Share (EPS), Working Capital Turn Over (WCTO) and external factors namely: oil prices, gold prices, the Fed’s interest rate and systematic risk, and also Indonesia government regulation towards FCX stock prices. This paper utilizes the ECM analysis methodology, the data during the period of 2000-2019, are obtained from quarterly financial statements issued to the Security Exchange Commission (SEC), the internet for share and commodity prices and also created dummy variable to accommodate the impact of Indonesia government regulation (MINERBA LAW). The results indicate that fundamental and external factors simultaneous have a significant influence on FCX stock prices. Partially in the long-term ROA, gold prices and world oil prices have a significant positive effect, while the Fed Rate and government policies have a significant negative effect. In the short term, the price of oil, gold and WCTO has a significant positive effect, while ROE has a significant negative effect. Keywords: external factors, fundamental factors, minerba law, mining company, stock price
Highlights
The extraordinary fluctuations of world oil prices from 2008 to 2015 followed by the fluctuation in world commodity prices and the uncertainty of American economic conditions after the subprime mortgage financial crisis, trade relations with China and unclear tax policies turn the economic prospects of America in the future cannot be predicted by the market, according to the world bank business outlook 2019. (Broadstock and Filis, 2014) revealed that compared to China, the United States is the country with the highest level of influence on oil price shocks which makes share prices, especially on the S&P 500 index, responsive to the oil price movement
The relationship of fundamental factors such as PER, Earning per Share (EPS), Net Profit Margin (NPM), PBV partially has a significant and positive effect on the price of shares listed on the Indonesian stock exchange (Pudji, 2017), this is with under the research of (Iqbal et al 2013) which revealed a positive relationship of fundamental factors with stock returns in Pakistan
The types and sources of data used in this study are secondary data, by calculating the ratio of NPM, Return on Equity (ROE), Return on Assets (ROA), EPS, and Working Capital Turn Over (WCTO) obtained from Freeport McMoRan's financial statements for the period 2000 to 2019 published to Securities Exchange and Commission (SEC) quarterly
Summary
The extraordinary fluctuations of world oil prices from 2008 to 2015 followed by the fluctuation in world commodity prices and the uncertainty of American economic conditions after the subprime mortgage financial crisis, trade relations with China and unclear tax policies turn the economic prospects of America in the future cannot be predicted by the market, according to the world bank business outlook 2019. (Broadstock and Filis, 2014) revealed that compared to China, the United States is the country with the highest level of influence on oil price shocks which makes share prices, especially on the S&P 500 index, responsive to the oil price movement.Freeport McMoRan is one of the companies listed on the New York Stock Exchange (NYSE) under the ticker symbol “FCX” and has operating areas in various countries including Indonesia through PT. The relationship of fundamental factors such as PER, EPS, NPM, PBV partially has a significant and positive effect on the price of shares listed on the Indonesian stock exchange (Pudji, 2017), this is with under the research of (Iqbal et al 2013) which revealed a positive relationship of fundamental factors with stock returns in Pakistan. While in the mining sector registered in Indonesia, (Sakinah, Chumaidiyah and Zulbetti, 2016) revealed the effect of ROA, ROE, NPM, EPS, and macroeconomic factors simultaneously have a significant influence. While for the use of working capital (Duggal and Budden, 2015) revealed in their research on the S&P 500 stock index, that companies who use less net working capital will reduce the cost of capital and increase their market value
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