Analysis of the Influence of the World's Oil Prices, Inflation, Interest Rate, and Rupiah / US Dollar Exchange Rate on the Return of Mining Sector's Shares Registered in Indonesia Stock Exchange in 2010 - 2015

Waseso Segoro, Andri Kartika

Abstract

The large amount of mineral yield in Indonesia has made the mining sector one of the most active sectors in the stock market. This encourages investors to invest on Indonesia's mining sector. However, there has been a significant degradation in the return of the mining sector's shares from the value of 48.59% in 2010 to 40.75% in 2015. This research aims to discover whether the world's oil prices, inflation, interest rate, and Rupiah / US Dollar exchange rate pose an influence, either partially or simultaneously, on the return of the mining sector's shares. Macroeconomic factors studied in this research are the world's oil prices, inflation, interest rate, and Rupiah / US Dollar exchange rate which are the variables allegedly influencing the return of the mining sector's shares. The sample of this research is the secondary data on the closing price of the return of the mining sector's shares, the world's oil prices (West Texas Intermediate), inflation, interest rate, and exchange rate in 2010-2015. Multiple linear regressions is the methodology of this research, utilising the SPSS 2.1 programme and including the classic assumption test, hypothesis test (t-test and f-test), regression model analysis, and the coefficient of determination test (R2 ). The result shows that the world's oil prices (West Texas Intermediate) has a significant positive influence on the return of the mining sector's shares while interest and exchange rates pose a significant negative one. On the other hand, inflation has no significant effect on the return of the mining sector's shares. Based on the results of this research, in order to anticipate the return of the mining sector's shares dropping because of the degrading prices of the world's oil, companies are suggested to suppress production costs to maximize profits and increase the price and return of their shares. Implications Also, since a high interest rate means the fall of shares return, companies should improve their performance so that investors are convinced to invest and get a good return from their investment. Finally, to anticipate the fall of shares return caused by the waning Rupiah / US Dollar exchange rate, companies could try to improve the quality of their mineral yields so that they can be sold with better prices, gaining maximum profits for the companies, and attracting investors with high shares return value. Keywords. World’s oil prices; inflation; interest rate; Rupiah / US Dollar exchange rate; shares return

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