ASSESSING THE RIPPLE EFFECT: THE ECONOMY AND MONETARY POLICY OF THE UNITED STATES OF AMERICA ON ASEAN-5 STOCK MARKET DYNAMICS

Abstrak

This study evaluated the impacts of the United States of America (USA) economy and monetary policy on the ASEAN-5 stock markets by analysing semiannual data from 2005 to 2023. Its primary objective is comparing the impacts across the different ASEAN-5 countries and identify additional factors contributing to stock performance beyond the macroeconomic variables of the USA. The panel autoregressive distributed lag (ARDL) approach was employed to scrutinise both long-term and short-term relationships between the ASEAN-5 stock markets and the economic variables of the USA. The gross domestic product (GDP) and monetary policy of the ASEAN-5 stock markets and the USA were also examined. It also investigated the real effective exchange rate (REER) and the relationship between the ASEAN-5 stock markets and the international trade and stock market performance of the USA. Findings revealed that when the USA experienced significant GDP growth, ASEAN-5 stock markets would be negatively influenced. The Federal Funds Rate of the USA produced a statistically significant and positive long-term impact. However, the REER and the USA international trade had no profound long-term impacts. USA GDP positively influenced the ASEAN-5 stock performance in the short term, with the USA Federal Funds Rate producing a negative influence. The REER demonstrated a positive short-term impact while the USA’s international trade negatively impacted the ASEAN-5 stock markets. Findings have highlighted the interactions between the economic indicators of the USA and the ASEAN-5 stock markets. This insight has provided a foundation for future research into the local and global economic dynamics contributing to the performance of the ASEAN-5 stock markets. This study also underscored the importance of resilience to external shocks by illustrating the significance of economic linkages. The capability to withstand external shocks, such as financial crises or global uncertainties, could contribute to more informed decision-making and support sustainable ASEAN-5 economic growth.