A study on the effect of macro economic factors on Borsa Istanbul's sectors' indices' performanses

The objective of this study was to examine the effect of macroeconomic variables on stock market performance. Within the context of this study, effect of chosen macroeconomic factors (inflations, interest rates, GDP growth, unemployment rate, balance of trade, gold prices and exchange rates) on sector indices performances (banks, service, property, food and beverage and textile) were examined. The data were collected for the years of 2007-2015 from TUIK, Turkish Central Bank, Borsa Istanbul and private finance institutions and the results were analysed through correlation and regression analysis. Each and every dependent variable was examined separately. The data collected were converted to "change percentage compared to year earlier" in order to make whole data type equal to each other. Regression analyses showed that there is an effect of macroeconomic variables on all sectors' indices' performances. Specifically, Exchange rate has a significant and negative effect on all sectors' indices' performances. Similar to this finding, GDP growth was also found as having a statistically significant and positive effect on food and beverage, property, banking, and textile sectors' indices' performances. Nevertheless, banking sector was found as the primary sector which affected by the macroeconomic variables. In fact, the sector's index performance is affected positively by the inflation rates and GDP growth while affected negatively by the Exchange rates. Key Words: Stock Market, Stock Market Performance, Sector Indices, Macroeconomic Variables