What drives stock market growth? A case of a volatile emerging economy

Syed Mujahid Hussain, Timo Korkeamäki, Danielle Xu, Ashfaque Hasan Khan

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

We study the determinants of the explosive stock market growth and increased foreign portfolio investment in Pakistan. Our results indicate that in contrast to evidence from developed markets, the aggregate stock returns are not driven by macroeconomic fundamentals in Pakistan. Moreover, foreign portfolio investors do not tend to react to changes in economic variables in Pakistan. As fundamentals fail to affect stock returns in Pakistan, they may be based more on speculative motives. Our results suggest that in the absence of a strong institutional and regulatory framework, economic policies have only a limited effect on stabilizing an emerging market.

Original languageEnglish
Pages (from-to)209-223
Number of pages15
JournalEmerging Markets Finance and Trade
Volume51
Issue number1
DOIs
Publication statusPublished - 2015

Fingerprint

Emerging economies
Pakistan
Stock market
Stock returns
Macroeconomic fundamentals
Economic variables
Economic policy
Institutional framework
Foreign portfolio investment
Investors
Regulatory framework
Emerging markets

Keywords

  • Emerging markets
  • Foreign portfolio investment
  • Macroeconomic announcements
  • Speculative
  • Trading

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)

Cite this

What drives stock market growth? A case of a volatile emerging economy. / Hussain, Syed Mujahid; Korkeamäki, Timo; Xu, Danielle; Khan, Ashfaque Hasan.

In: Emerging Markets Finance and Trade, Vol. 51, No. 1, 2015, p. 209-223.

Research output: Contribution to journalArticle

Hussain, Syed Mujahid ; Korkeamäki, Timo ; Xu, Danielle ; Khan, Ashfaque Hasan. / What drives stock market growth? A case of a volatile emerging economy. In: Emerging Markets Finance and Trade. 2015 ; Vol. 51, No. 1. pp. 209-223.
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