Research Purpose: This study investigates the impact of macroeconomic variations on manufacturing stock prices in Nigeria from 2003 to 2022. The manufacturing All Share Index (ASI) is used as a proxy for stock prices, while interest rate, inflation, GDP, and exchange rate are considered as proxies for macroeconomic variables.
Methodology: The study employs the Auto-Regressive Distributed Lag (ARDL) and Error Correction Model (ECM) as statistical tools to analyse the extracted data. Various statistical diagnostics, including unit root tests and co-integration tests, are conducted to assess the short-run and long-run relationships between the variables.
Findings: The analysis reveals that the selected macroeconomic variables—inflation, interest rate, foreign exchange, and economic growth—account for over 90% of the variation in manufacturing stock prices in Nigeria. This indicates a strong influence of these variables on stock prices. Specifically, the findings suggest that:
Conclusion: The study concludes that macroeconomic variables significantly influence manufacturing stock prices in Nigeria. It highlights the importance of understanding these relationships for both investors and the manufacturing sector.
Recommendations: It is recommended that investors should prioritise fundamental analysis over technical analysis when making stock market decisions. Finally, the manufacturing sector should recognize and consider the correlation between stock market performance and macroeconomic variables in their strategic planning.
You may also start an advanced similarity search for this article.