Stock Market Case Study

1.0 Introduction

The stock market has conventionally been observed as a fragment of the financial market. Stock market supposed that the crash of any development or policy change is speedily reflected in the share prices. Stock price frequently connected with prospect about future economic activity.

According to Yue (2014) research state that stock market plays an important role in an economy. A strong and steady stock market be able to encourage economic growth by create a center of awareness domestic and foreign capital by control investment fund to business. Since the stock market been linked with economic growth as resource for capital. In opposite side, economic growth might be as the medium for share price expansion.

This study is

The financial crisis meets the critical affects the economy Malaysia. In the study of Yu and Xu (2000) stated that the financial crisis first felt in Thailand on July 2, 1997. And then spread to Malaysia, Indonesia, Philippine and Singapore. Furthermore financial crisis also effected including the Hong Kong, Taiwan, Korea, Japan and China. Around one year later, the financial crisis had spread its wrath to Russia and Latin America. This occur a sharp depreciation in their currency values and failing the stock market. Thus make the decline in export, and resulted in a slowdown of economic growth, in addition startling the rate of unemployment. Furthermore, the East Asian region also burden since internal economic problems which bring out a lot of company and enterprises to file the bankruptcy (Zaherawati, Zaliha, Nazni, and Hilmie, 2010).

Based on the Ariff and Yanti (1999) study during the financial crisis in 1997, the value of ringgit Malaysia had declined and equivalent to RM 2.42 of the U.S. dollar. On January 1998 the value of the ringgit against the dollar depreciated roughly 50 per cent, and meets a high value of RM 4.88 to the U.S.

Some of the studies hassle that to make sure the economy to run efficient, there require a superior stock market to shift funds from saving to investment opportunities. Intentionally, stock market play role as activator for sustainable economic growth.

According to Goh & Lim (2009) state that the Malaysia economic still on growth course interest rates remain low due to the financial crisis 2007 and 2008. “Asset prices are not deflating. Credit for consumers in selected sectors such as mortgage and auto is still somewhat easily available and loans to corporations may have been tightened due to the economic slowdown. The risk premium attached to the country is expected to stay high. According to Yue ( 2014) the financial crisis in 2007 and 2008 have effect the Malaysia economic to changes in two decades. The sub period of correspond to bull and bear market conditions.this division of observation periods is aimed at revealing the impact of stock market enviromentin malaysia. futhermore, to value the potential changes in the dynamic relationship between the marcoeconomic variable. This study indentofy which of the macroeconomic variblesare drives across different sub periods and economic growth. And from finding could give new views of the malaysia srock