The Effect of Inflation, Interest Rates and Exchange Rates on Stock Prices of Manufacturing Companies in Basic and Chemical Industrial Sectors on the Indonesia Stock Exchange (IDX)

Jefry Jefry,Abid Djazuli

doi:10.47747/ijbmer.v1i1.49

Abstract

This study examines the effect of inflation, interest rates and exchange rates on stocks in basic industrial sector and chemical manufacturing companies on the Indonesia Stock Exchange (BEI). The study period is 2013 to 2017. An ordinary least square (OLS) is employed. The results show that (1) There is a significant effect of inflation, interest rates and exchange rates on stocks. together with the Basic Industry and Chemical Sector Manufacturing companies on the Indonesia Stock Exchange (IDX); (2) There is a significant influence of inflation on shares in manufacturing companies in the Basic Industry and Chemical Sector on the Indonesia Stock Exchange (BEI); (3) There is no significant effect of interest rates on stocks in basic industrial sector and chemical manufacturing companies on the Indonesia Stock Exchange (BEI); (4) There is no significant effect of Exchange Rates on Shares in Basic Industry and Chemical Manufacturing companies on the Indonesia Stock Exchange (IDX).

Highlights

The economy in Indonesia has experienced rapid growth from time to time
The results showed that the exchange rate, inflation and interest rates together have a significant effect on stock prices
The fourth result of this study shows that inflation, the exchange rate of the rupiah, the interest rate of Bank Indonesia certificates have a significant influence simultaneously on the Composite Stock Price Index

Summary

Introduction

The economy in Indonesia has experienced rapid growth from time to time. This growth is in line with the era of economic globalization faced by the world community. Investing is the placement of a number of funds at this time to expect returns that will occur in the future. In this modern economic era, companies really need additional capital to boost their operational performance. Stock investment is a type of investment that is quite high risk, so investors are required to make the right decision to invest their shares so that investors can get the return as expected. The results of investors' decisions in determining profitable investments are influenced by the ability of investors to understand and predict macroeconomic conditions in the future

Objectives

Methods

Results

Conclusion