The impact of macroeconomic indicators on Qatar stock exchange: A comparative study between Qatar exchange index and Al Rayyan Islamic index†

Abstract

The prime objective of this study is to examine the impact of five macroeconomic indicators (oil price, gas price, money supply, interest rate, and producer price index) on the performance of Qatar Stock Exchange, which will be represented by two indices: QE Index (QEI) and Al Rayyan Islamic Index (RII). A comparison is held between the two indices to determine how similar or different they are impacted by the selected macroeconomic indicators. Correlation and Multiple Regression tests are used to analyze the collected data, which cover 51 months starting from January 2014 up to March 2018.The results of the Correlation test between the independent variables, i.e., the macroeconomic indicators show that oil price, gas price, and producer price index are strongly positively related. However, they are moderately negatively related to Interest Rate and weakly negatively related to money supply. As for money supply and Interest Rate, they are positively related. The results of the multiple regression test show that interest rate has a significant negative relationship with both indices while the other macroeconomic indicators have different impacts on each of the two indices. Gas price and money supply have negative relationship with QEI, however, oil price has a positive relationship with RII whereas producer price index has a negative relationship with RII.Keywords: Qatar; Economics; Finance; Islamic finance; Stock market; Qatar Stock Exchange; Macroeconomic indicators; Qatar Exchange index; Al Rayyan Islamic Index; Multiple regression