Domestic Macroeconomic Fundamentals and World Stock Market Effects on ASEAN Emerging Markets

Liberalization and globalization of world markets have resulted in inter-relatedness of financial markets and contagion global events. Numerous examples of stock market crashes, currency crisis and the recent sub-prime crisis have affected financial performances of markets across the globe. In the recent decade, waves of speculative activities are not limited to one market only but they can move from one corner of the globe to another within hours. This research investigates the effects of domestic macroeconomic fundamentals and world stock market on the domestic financial market performances of ASEAN emerging nations. Findings show that domestic economic growth, interest rate, and exchange rates are significant in affecting domestic financial markets. Dow Jones Industrial Average as a proxy for world stock market is also found to have significant positive relationship with the more developed financial market in Singapore