Economic Determinants and Oil Shocks: Unravelling the Impact of Kuala Lumpur Composite Index (KLCI) Performance

Dhia Damia Husni, Abd Hadi Mustaffa

2025

Abstract

The Kuala Lumpur Composite Index (KLCI) increase steadily from 1970 to 2023 despite major swings in important economic indicators such as inflation, exchange rates, GDP, and oil shocks. This divergence between economic issues and stock market performance emphasises the importance of delving deeper into the underlying causes. This study examines the impact of economic forces and oil shocks on KLCI performance using World Bank data from 1970 to 2023. The Auto Regression Distribution Lag (ARDL) model was used to determine how these variables influence stock market performance in the short and long run. Two findings are highlighted based on ARDL analysis. First, the short-run findings indicate that Oil Price, GDP, and Exchange Rate positively impact KLCI. However, inflation delivers a significant and negative impact on KLCI. Second, the long-run findings indicate that oil prices and GDP deliver significant and positive impacts towards KLCI. However, inflation and exchange rates have significant and negative impacts on KLCI. Those findings lead towards further discussion and policy recommendations in the later section, aligning with SDG 7 (Affordable and clean energy) and 8 (Decent Work and economic growth).

Paper Citation

in Harvard Style

Husni D. and Mustaffa A. (2025). Economic Determinants and Oil Shocks: Unravelling the Impact of Kuala Lumpur Composite Index (KLCI) Performance. In Proceedings of the 7th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB; ISBN 978-989-758-748-1, SciTePress, pages 243-250. DOI: 10.5220/0013429700003956

in Bibtex Style

@conference{femib25,
author={Dhia Husni and Abd Mustaffa},
title={Economic Determinants and Oil Shocks: Unravelling the Impact of Kuala Lumpur Composite Index (KLCI) Performance},
booktitle={Proceedings of the 7th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB},
year={2025},
pages={243-250},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0013429700003956},
isbn={978-989-758-748-1},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 7th International Conference on Finance, Economics, Management and IT Business - Volume 1: FEMIB
TI - Economic Determinants and Oil Shocks: Unravelling the Impact of Kuala Lumpur Composite Index (KLCI) Performance
SN - 978-989-758-748-1
AU - Husni D.
AU - Mustaffa A.
PY - 2025
SP - 243
EP - 250
DO - 10.5220/0013429700003956
PB - SciTePress