This document discusses the relationship between stock markets and economic growth. It presents several ways that stock markets can positively impact an economy: 1) Through foreign direct investment and increased market liquidity. Foreign investment fuels growth and larger markets allow for easier trading. 2) By increasing confidence and optimism among investors. Positive economic news encourages investing while negative news discourages it. 3) By influencing interest rates set by the government. Lower interest rates motivate investing in the stock market rather than saving. 4) By serving as a barometer of the nation's fiscal health. The stock market reflects the overall economic trends and shifts in a country.

2.  Presented to: Mr. omar
 Presented by: Abrar Abdul Sattar
 Roll Number: 12
 Subject: Portfolio Theories And
Investment Analysis
MS(Management Science)
Department Management Science
University of Sargodha, Mandi
Bahauddin Campus

3. The stock market is a system
through which the company‘s stocks,
shares, derivatives and securities are
traded.
The place where this trading takes
place is known as the Stock
Exchange.

4. The gross domestic product (GDP) is one
the primary indicators used to gauge the
health of a country's economy. It represents
the total dollar value of all goods and services
produced over a specific time period. Two
approaches to measure GDP
i. Income approach
ii. Expenditure approach

5. Direct and strong relationship between
efficient stock market on economic growth.
Stock Market factor are positively or negatively
effect economy growth.
References:
i. Muhammad Shahbaz (2008) “Stock Market Development and
Economic Growth”
ii. Jecheche Petros(2005) The effect of the stock exchange on
economic growth.
iii. Asterio, D. and S. Price(2007).

6. Direct
Stock Market Economic Growth

7. 1. Foreign Direct Investment
2. Confidence and Expectation
3. Interest rate
4. Barometer
5. Human Capital

8. Foreign direct investment and value traded
have positive impact on stock market
performance.
Foreign direct investment has positive
relation with gross domestic product of
Pakistan as it is considered as an engine for
the economic growth of the country.
References:
i. Mehwish Zafar 2013
ii. Imran Ali (2009)

9. It is easy to say that interest rate has a negative impact
on stock market
higher the interest rate lower the efficiency of stock
market
because if investors are getting higher without taking
any risk then why should they invest in stock market
so for a better economy the ruling state should lower its
interest rate so that economy of that country gets
developed.
References:
i. Hamdan Ali
ii. Groenewold 2003

10. Human capital has positive effect on growth. Human capital
and physical capital influence economic growth positively.
public and private investment as complimentary and
emphasizes on the role of government to improve the
efficiency of financial sector of the economy along with its
direct role in enhancing human and physical capital in
boosting economic growth.
size of the market and liquidity prevalent in the
market in terms of market capitalization.
References:

11. Investors are always trying to predict the
future.
A key factor is the mood of investors. If
they receive economic news that gives
optimism then they are more likely to buy
shares.
If they receive bad news they will sell.
References:

12. A stock exchange can serve as a barometer of
a nation’s fiscal health, broadcasting the ups,
downs, trends and shifts that are the
benchmarks of a society’s financial
infrastructure.
 So stock market use as a barometer for the
government policy for economic growth.
References: