Analysis of Factors Affecting the S&P/OIC COMCEC 50 Shariah Stock Index with Inflation as Intervening Variable
Nani Suhartini

Sultan Ageng Tirtayasa University

Abstract

Purposes: This study investigates the influence of geopolitical risk (GPR), US economic policy uncertainty (US EPU), and WTI oil prices on the OIC COMCEC 50 Shariah stock index. Additionally, it seeks to assess whether inflation acts as a mediator in these relationships. The purpose is to understand how global factors impact the performance of Islamic financial markets and whether inflation is a significant intervening variable.
Methods: The research employs a quantitative method using an associative approach. Data was collected through purposive sampling, focusing on key variables over a defined period. Path analysis was used as the primary technique to analyze the relationships between the variables, with inflation considered as the intervening variable. The model tested the direct and indirect effects of GPR, US EPU, and WTI oil prices on the Shariah stock index.
Results: The study shows that geopolitical risk (GPR) and US economic policy uncertainty (US EPU) have no significant impact on the OIC COMCEC 50 Shariah Index, with coefficients of 0.748 and 0.888, respectively. However, WTI oil prices have a notable effect on the index, with a coefficient of 0.009. GPR, US EPU, and WTI oil prices also significantly affect inflation, but inflation itself (0.167) does not impact the stock index or mediate the global factors^ effects on it. This suggests that other variables might better explain the index^s movements.
Conclusion: The study finds that while global factors like geopolitical risk, US economic policy uncertainty, and WTI oil prices significantly impact inflation, inflation does not effectively mediate the OIC COMCEC 50 Shariah stock index. Other factors likely have a more direct influence on the stock index, highlighting the need to explore additional determinants.
Suggestions: Future research should explore other factors that may explain the link between global risks and Islamic stock markets. Policymakers and investors should focus on direct global factors like oil prices, rather than relying heavily on inflation to predict stock movements.

Keywords: geopolitical risk, US economic policy uncertainty, WTI oil price, inflation, OIC COMCEC 50 Shariah Index, intervening variables

Topic: Islamic capital market