THE EFFECT OF MACRO-ECONOMIC VARIABLES ON THE SHANGHAI STOCK INDEX IN CHINA

Abstract

This report aim to find the effect of macroeconomic variable, such as Inflation rate, Interest rate, Exchange rate, money supply and Crude oil price towards Shanghai Stock Index of China during Jan 2012 to Jul 2017, and then present some suggestions to how to predict the trend of stock market in accordance with the macroeconomic variables. Quantitative research uses in this study. And the researcher use multile regression to analysis the effect of macroeconomic variables to Shanghai Stock Index from date of Jan 2012 to Jul 2017, and then T-test, F-test and R Square also could be used in this research. From the regression analysis, it concluded that inflation rate and money supply have no significance to Shanghai Stock Index, while interest rate, exchange rate and crude oil price have significance to Shanghai Stock Index in this research druring Jan 2012 to July 2017. The research is aim to find influence of macroeconomic variables to Shnaghai Stock Index, and then can predict the development trend of economy in China. Furthurmore, this research can give deeper understanding on economy for others.