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The Influence of Global Stock Index and the Economic Indicators of Stock Investment Decision by Foreign Investors in the Indonesian Stock Exchange

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  • Sulaeman Rahman Nidar

    (Business and Management Department, Padjadjaran University, Indonesia Author-2-Name: Erwin Jaya Diwangsa Author-2-Workplace-Name: Padjadjaran University, Indonesia)

Abstract

"Objective � The objective of this study is to determine how the movement of several indices and indicators of the global economy affect the change in investment by foreign fund flows in the Indonesia Stock Exchange (BEI). Methodology/Technique � Some global stock indices used in this study comprise the Dow Jones index, the Nikkei 225 index, the Shanghai index (SSE) and the Singapore Index (STI). Data were taken monthly from March 2009 to June 2014. Findings � The results obtained from this study indicate that the Dow Jones index and the STI index have a significant positive effect on the movement of foreign investments in the Stock Exchange. In contrast, the movement of world oil prices and exchange rate of the IDR/USD have a significant negative effect on the movement of foreign investments in the BEI. Novelty � The results of this study reinforces that the depreciation of the rupiah against the USD is an indication that the fundamentals of the Indonesian economy is not strong enough."

Suggested Citation

  • Sulaeman Rahman Nidar, 2017. "The Influence of Global Stock Index and the Economic Indicators of Stock Investment Decision by Foreign Investors in the Indonesian Stock Exchange," GATR Journals jfbr121, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr121
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    References listed on IDEAS

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    3. Seuk Wai Phoong & Siok Kun Sek, 2013. "A Markov Switching Vector Error Correction Model on Oil Price and Gold Price Effect on Stock Market Returns," Information Management and Business Review, AMH International, vol. 5(7), pages 331-336.
    4. Sadorsky, Perry, 2012. "Correlations and volatility spillovers between oil prices and the stock prices of clean energy and technology companies," Energy Economics, Elsevier, vol. 34(1), pages 248-255.
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    Cited by:

    1. Vietha Devia S.S., 2019. "The Correlation of Exchange Rate and Inflation and Its Effect on Stock Markets. Case Study on Consumer Good Index Indonesia: 2004 – 2017," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(2), pages 32-44, June.

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    More about this item

    Keywords

    Dow Jones; Nikkei 225 Index; Shanghai Index (SSE); STI Index; World Oil Prices; World Gold Price; Exchange Rate IDR/USD.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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