Abstract
The recent development in Islamic finance is the introduction of Shariah-compliant stocks. To address such developments, this study is aimed at analysing the macro-economic determinants of such stocks. For empirical investigation, the monthly data of inflation, interest rate, market return and unemployment rate were collected from the years 2011 to 2018 and the multiple ordinary least squares (OLS) method was applied. The results revealed that market return plays significant positive role in defining the performance of the KMI-30 index. However, inflation and the unemployment rate negatively impact stock prices. In general, this study concludes that KMI-30 index performance is exposed to the macro-economic environment in Pakistan. In addition, this study provides useful insight to managers, PSX investors, and policy makers in Pakistan with respect to the stocks of the companies that fulfil Shariah requirement.
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