The Effect of Macro-economic Variables Towards the Financial Index on Indonesia Stock Exchange

Abstract

This study aims to analyze the effects of macro-economic on the financial index in Indonesia
Stock Exchange with variables consisting of Exchange Rate, Interest Rate, Inflation, and Money
Supply (M2) partially.” The financial sector index is an indicator of the whole movement of stock
prices in the financial industry, which listed on the Indonesia Stock Exchange. The movement of
stock prices of the financial index used is the financial sector stock price of index monthly,
ranging from January 2010 until December 2014 with a total of 60 data.
Quantitative processing on operational variables to test hypotheses, then done several stages of
test data to avoid errors, such as classic mistake, model errors, etc. The US $ Exchange Rate
and Money Supply (M2) are partially significant and positively affect the financial index, while
the BI Rate significantly and positively affects the financial index. Inflation Rates affect
positively but not significantly.
According to the results of this study, if the investor expects capital gains derived from financial
firms with the financial index as a benchmark, the investor should then examine the macroeconomic conditions beforehand. Due to macro-economic conditions, especially the US $
Exchange Rate, Money Supply (M2), BI Rate, and Inflation Rate, in accordance with things
observed in this study, the investor can find out the right time to buy or sell his stock..