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Driving forces of the ASEAN-5 stock markets integration

Bakri Abdul Karim (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Sarawak, Malaysia)
Hoe Xin Ning (Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Sarawak, Malaysia)

Asia-Pacific Journal of Business Administration

ISSN: 1757-4323

Article publication date: 23 September 2013



The purpose of this study is to examine the determinants of stock market integration among five selected Association of Southeast Asian Nations (ASEAN) emerging stock markets (Malaysia, Thailand, Indonesia, the Philippines and Singapore).


Both pooled OLS and panel data regressions were used over the period spanning from 2001 to 2010.


This study finds that trade and stock markets volatility significantly influence stock market integration in this region. This finding is consistent with the view that the stronger the bilateral trade ties among the countries, the higher the degree of co-movements. In addition, if one market's volatility increases relative to another market's volatility, the first market's returns should also increase relative to the second market's return.

Practical implications

As the ASEAN-5 stock markets are integrated, there is limited room to gain benefits from international investment diversification in the region. There is a need for policy coordination among ASEAN-5 members to mitigate the impacts of financial instability.


The determinants of stock market integration are still largely unexplored in the previous studies. This study attempts to partially fill the gap in the literature and to provide recent empirical evidence on the forces behind the stock market integration among the ASEAN-5.



Financial support from UNIMAS and the Ministry of Higher Education Malaysia through Fundamental Research Grant Scheme (Grant No: FRGS/05(29)/783/2010(64)) is gratefully acknowledged.


Abdul Karim, B. and Xin Ning, H. (2013), "Driving forces of the ASEAN-5 stock markets integration", Asia-Pacific Journal of Business Administration, Vol. 5 No. 3, pp. 186-191.



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