The Impact of Macroeconomic on Islamic Stock Prices: Evidence from Indonesia

This paper aims to examine the influence of macroeconomic variables namely inflation rate, industrial production index, and the interest rate on Indonesia Islamic stock that be measured by Indonesia Islamic Stock Index (ISSI). This index consists of 350 Islamic stocks at Indonesia Stock Exchange. Investors generally believe that macroeconomic activities give a large impact on the volatility of the stock prices (Gan et al., 2006). This study uses quantitative approach with multiple linear regression by utilizing monthly data over the period of May 2011 to November 2017. The results of this empirical research show that Indonesia Sharia Stock Index is affected significantly by the inflation rate, industrial production index, and interest rate. Therefore, this is necessary to evaluate the relationship between macroeconomic variables and Islamic stock prices since the results would bring an impact to stimulate the existence of Islamic capital market in Indonesia.