Philippine E-Journals

The Philippine Stock Market: Its Link to the National Economy

Richard Aquino | Mahender Balani | Ronnie Quizon

Discipline: Economics, Business

 

Abstract:

The primary objective of this paper is toshow the link between Philippine Stock Marketsand the Philippine economy with due considerationto other economic and noneconomicvariables. This paper also explainsthe effect of investor speculation on the performanceof stocks.The stock market of a country is a venuefor the transfer of long-term capital from asavings bank to company ownership and assuch, reflects the amount of local and foreigncapital that enter the market. Manyeconomists have considered the stock marketto be a precursor to the economic growth ofthe country. This they gleaned from the seeminglypositive correlation between stock indexand economic performance. It was especiallytrue in the latter half of 1987 when the grossnational product (GNP) grew by more thanfive percent and the Philippine markets experienceda boom.