What drives the stock market growth? A case of a volatile emerging economy

Mujahid Hussain, Timo Korkeamäki, Danielle Xu, Ashfaque Hasan Khan

Research output: Contribution to journalArticleScientificpeer-review

9 Citations (Scopus)


We study the determinants of the explosive stock market growth and increased foreign portfolio investment in Pakistan. Our results indicate that in contrast to evidence from developed markets, the aggregate stock returns are not driven by macroeconomic fundamentals in Pakistan. Moreover, foreign portfolio investors do not tend to react to changes in economic variables in Pakistan. As fundamentals fail to affect stock returns in Pakistan, they may be based more on speculative motives. Our results suggest that in the absence of a strong institutional and regulatory framework, economic policies have only a limited effect on stabilizing an emerging market.
Original languageEnglish
Peer-reviewed scientific journalEmerging Markets Finance and Trade
Issue number1
Pages (from-to)209-223
Number of pages15
Publication statusPublished - 02.04.2015
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Emerging markets, foreign portfolio investment, speculative trading, macroeconomic announcements.


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