The Impact of Macroeconomic Factors on Stock Market: An Evidence from China and Pakistan

Abstract

Silk Road is an ancient strategy of economic and trade routes development networks between emerging and developing economies (China & Pakistan). The main purpose of this research is to empirical inspect the association that exists among the China stock exchange (SSE), Pakistan Stock Exchange (KSE-100) with macroeconomic variables (Gross Domestic Product, Balance of Trade, Foreign Direct Investments, Lending interest rate, and Money Supply). The annual time series data from 1995 to 2019 used to find out the results. Macroeconomic variables have an essential role in any changes in every economy. Any unexpected variations amongst these variables influence the economy in several ways. Multiple regression techniques were analyzed and examine for the significance of data to approximate the probable impacts of variables on stock market prices. Breusch Godfrey Serial Correlation with heteroskedasticity assessment is utilized to investigate the correctness as well as residual normality of series data. The finding of this study exposed that GDP is negative significant 10% with SSE and 1% at level with KSE, FDI is insignificant with SSE. negative significant 10% at level with KSE and the result of BOT shows positive significant 5% at level with SSE while insignificant with KSE, M2 is significant 5% at level with SSE but insignificant with KSE and LI are shown statistically significant 1% at level with SSE While positive significant 10% with KSE. It is determined that it is significant and an insignificant relationship among the variables with both stock market returns. The financial analyst, policymaker appreciate these findings, investors, shareholder, stock exchange editors, security exchange supervisors as well as for the Government.