Abstract
It is commonly known that the factors that are affecting stock prices are macroeconomic variables, returns on alternative investment means, political and social stability, developments in other countries, risk preferences of domestic and foreign investors, information regarding companies and manipulations. Due to the effect of financial globalization and as local capital has transformed into an international quality, individual country economies are now more fragile against not only internal dynamics but external factors as well. Under these circumstances, the Borsa Istanbul is a stock market which has recently been popular for investors who carefully chase and direct their investments toward this spot. The present study, except the generally adopted economical factors, investigates the effect of variations in gold and oil prices on BIST 100 index econometrically. The reason for analyzing the effect of gold prices is that the global interest toward gold metal has increased overwhelmingly which caused major central banks of both developing and developed world countries increased their gold reserves. This tendency created a serious increased demand for gold which accordingly has led increased prices in the global market and affected other macro economical variables. The reason for analyzing oil prices is that fluctuation in oil prices affects economical factors both directly and indirectly. Whereas the BIST 100 index has positive relationship with oil prices; it has negative relationship with gold prices. DOI: 10.5901/mjss.2013.v4n10p726
Highlights
It is known that there is parallelism between economical development and advancement of capital markets
Stock prices reflect the investors’ estimations regarding expected returns and future cash flows from a certain stock; and these estimations are affected from the general condition of the national economy and international economy
In our study that is designated to reveal the relationship between changes in gold and oil prices and the BIST 100 index, logarithmic conversions of monthly data obtained from the R.T
Summary
It is known that there is parallelism between economical development and advancement of capital markets. The relationship between stock prices and macro economical factors affecting stock prices has been investigated by numerous researchers. Due to its characteristics as an alternative investment to stocks and as a factor that can affect the stock prices, gold reserves the value of investments. While this characteristic heads off its other specifications, based on recent fluctuations in gold prices during the recent years, it is recognized as a speculative investment mean as well. Oil prices are considered as an important variable which are affecting capital markets. There are interaction between oil prices and capital markets due to direct or indirect economical effects of oil prices.
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