Macro and micro-economic determinants of the mining companies’ share returns

Abstract

The study examined the macro and micro-economic determinants of the mining companies’ share returns. The system-driven generalised methods of moments was employed to analyse panel data comprising ten listed mining companies on Johannesburg Securities Exchange (JSE) covering the period from 2013 to 2021. The empirical findings using ROA as a performance measure depicts a positive and significant correlation between share price (SP) and the independent variables which include ROA, gross domestic product growth (GDPG) and interest (INT). On the same note, SP have a negative and significant correlation with lagged share price (LSP), return on market (RM) and current ratio (CR). Also, the findings review that RM, debt to equity (DTE) and inflation (INFL) were found to have a positive and significant correlation with return (R). The results also show that there is a negative and significant correlation between R, GDPG and INT. The results also show that DTE and INFL have a positive and significant correlation with total returns (TR) while GDPG, RM and INT have a negative and significant correlation with TR. When ROE was used as a performance measure result show that SP has a positive and significant correlation with ROE, GDPG and INT. It was further noted that there is a negative and significant correlation between SP and the variables which include RM and price to earnings (PE). It was further found that R has a positive and significant correlation with RM, DTE, PE, and INFL. Also, the results show that there is a negative and significant relationship between R and INT. The results showed that TR has a negative and significant correlation with CR and INFL while it is a positively and significantly related with GDPG and INT. Future studies must investigate other macro and micro-economic determinants of the mining companies’ stock returns.