Macroeconomic Variables and Performance of Stock Prices of Companies Listed at Nairobi Securities Exchange, Kenya
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Date
2021
Authors
Wagwa, Owino Fredrick
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The Nairobi Securities Exchange has experienced its fair share of price fluctuations in the recent past. The volume of stocks which were traded at the Nairobi Securities Exchange has fluctuated between 5,856 in 2008 to 6,335 in 2018. Specifically, a steady decline from a high of 8,133 in 2014 to a low of 5,813 in 2017. Listed Companies’ Stock prices have been unstable and versatile. The general objective was to examine macroeconomic variables and their effect on stock price performance for companies recorded at Nairobi Securities Exchange, Kenya. Using a descriptive survey, the research targeted all companies listed as at December 2018. Nairobi Securities Exchange was the source for information on the performance of stock prices utilizing the Nairobi Securities Exchange all share index. Data collected was subjected to diagnostic tests. Descriptive, inferential statistics, regression analysis was done and tables and charts used to present findings. The study established that Money Supply had the highest significant positive effect on the performance of stock price of registered in the Nairobi Securities Exchange, Kenya. Inflation had significant positive effect on performance of stock price of registered companies. The study further established that Gross Domestic Product had the least significant positive effect. Lastly, Interest rate was the predictor variable with an insignificant negative effect on the dependent variable. The Central Bank of Kenya needs to enable sufficient levels of money supply to encourage investments. However, a tradeoff must be maintained. In addition, Central Bank, Kenya (CBK) need to place measures meant to ensure that interest rates are kept at a level that allows for investor borrowing and encourages trading in the stock market. Deliberate policies be entrenched to enable growth of the country’s Gross domestic product. Equally, Government should endeavor to maintain inflation rates at the lowest possible levels. In as much as there was positive link between inflation and stock prices of listed companies, this could have resulted from other market impurities. The study suggests that other studies be conducted to include other variables and to validate these findings.
Description
A Research Project Submitted to the School of Business in Partial Fulfillment for the Award of Degree in Master of Business Administration (Finance Option) of Kenyatta University, May, 2021
Keywords
Macroeconomic Variables, Performance, Stock Prices, Companies Listed, Nairobi Securities Exchange, Kenya