THE IMPACT OF METAL PRICES ON BORSA ISTANBUL INDUSTRIAL INDEX: EVIDENCES FROM FOURIER COINTEGRATION TEST

Abstract

The fluctuations in commodity prices since the beginning of the 2000s have had significant effects on the global economy and national economies. Commodity price increases are considered as a reason that increases the effects of economic and political crises and even create a crisis. Particularly, the sudden increases in energy, metal and food prices caused the volatility in macroeconomic indicators to increase. The high importance of stock markets for economic growth requires investigating the effect of commodity prices on stock prices. The main purpose of this study is to reveal the effect of metal prices and exchange rates on the Borsa Istanbul (BIST) Industrial Index using the monthly data between January 2004 and December 2019. Several studies in the literature attempt to explore the dynamic interactions between commodity and stock markets. This study will contribute to the empirical literature dealing with the relations between commodity and stock markets by examining the effect of metal prices, which we can say is important for the industrial sector of Turkey, after the energy price, on the BIST-Industrials index. According to the findings, the exchange rate and the change in metal prices affect the BIST-Industrials index in the same direction.