Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
0Activity
0 of .
Results for:
No results containing your search query
P. 1
The Relationship Between the Real Estate Market and the Stock Market and Its Impact on the Strategic Planning Process in the Jordanian Organizations (1)

The Relationship Between the Real Estate Market and the Stock Market and Its Impact on the Strategic Planning Process in the Jordanian Organizations (1)

Ratings: (0)|Views: 0|Likes:
Published by drahmad764
Research Paper
Research Paper

More info:

Categories:Types, Research
Published by: drahmad764 on May 07, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/07/2013

pdf

text

original

 
Journal of Modern Accounting and Auditing, ISSN 1548-6583August 2011, Vol. 7, No. 8, -
The Relationship Between the Real Estate Market and the Stock Market and Its Impact on the Strategic Planning Process in theJordanian Organizations
Ahmad M. Zamil
 
King Saud University, Kingdom of Saudi ArabiaAhmad Y. M. Areiqat
 Al-Ahliyya Amman University, JordanThis study aims at the relationship between the real estate market and Amman Stock 
 
Exchange, through the impactof three macroeconomic factors (GDP, inflation rate, and the population growth rate) and another three factors fromthe microeconomic indicators (interest rate, remittances of Jordanian expatriates, and the loans provided by theJordanian banks). The results show that the stock market is more sensitive to the microeconomic indicators than thereal estate market, and responds more rapidly than the real estate market for the changes in the microeconomicindicators. The study presents some recommendations for the Jordanian companies who own or manage anyinvestment portfolio to be aware for the existing relationship between the two markets, and to reflect this awarenessin their strategic Plans, Particularly in the regression atmosphere that causes by global crisis.
 Keyword:
real estate market, stock market, strategic planning
Introduction
The relationship between the real estate market (R.E.) and the financial stock market
 — 
as two investmentarenas within the markets of any economy has a great importance. The changes in microeconomic andmacroeconomic factors across the time affect the two markets in many areas such as, prices, demand, supply,and the cost, and the rate of return. For Jordan, the landscape or real estate in Jordan evolved transforming theface of major cities across the kingdom. The real estate industry showed significant changes during the fiveyears expressed by a large development projects ranging from residential, commercial, tourism, and industrialestates. This booming in the real estate sector can be attributed to several factors: (1) the growth of theJordanian economy; (2) investors from gulf countries with excess liquid, resulting from rising oil revenues whofound profitable opportunities in the Jordanian market; (3) political unrest in Lebanon and Iraq, increased the population in Jordan and the demand for housing and other services; (4) the wide base of young population inJordan created a natural demand for housing (Jordan investment board, 2008).But, almost since two years the real estate market in Jordan shows a sharp regression in both demand and
Ahmad M. Zamil, Ph.D., associate professor, Faculty of Administrative Science, Riyadh Community College, King SaudUniversity.Ahmad Y. M. Areiqat, Ph.D., assistant professor, Business Administration Department, Faculty of Financial and AdministrativeScience, Al-Ahliyya Amman University.
 
THE RELATIONSHIP BETWEEN THE REAL ESTATE MARKET AND THE STOCK MARKET
2
 prices. And this regression reflected on the prices of the construction companies’ stocks in Amman stock 
exchange. Also this regression resulted by many factors in both macro and micro economic. This study willfocus on the impact of the change in gross domestic product, the change in the inflation rate, and the populationgrowth on the trading volume of the real estate market, as macro economic factors, and the impact of thefunding polices in the Jordanian banks that provided to the two markets, the change of the remittances of Jordanian expatriates, and the change in the interests rate. And after determination the impact of those factorson each market, the researcher can deduce the relationship between the two markets, and finally thisrelationship features will become as independent variables to measure their impact on the strategic planning process in the Jordanian organizations.
Theoretical Framework and Hypothesis
Problem Statement and Questions
Because the two markets affected by the same economical factors, we can suggest the problem of this
study in the form ―variations in the prices and trading volume of the real estate market have a significant impacton the Amman stock exchange’s indicators‖: The gener 
al price index and the trading volume, this causalrelationship may affect the strategic planning process in Jordanian organizations.The study is going to discuss this problem through the following questions:(1) Is there any relationship between the variations in the prices of the real estate assets and the variationsin Amman stock exchange?(2) What is the role of inflation rates in the variations occurring in the two markets?(3) What is the role of the changes in (GDP) in exploring and forecasting the potential variations in thetwo markets?(4) How can Jordanian organizations benefited from the impacts of the micro economic factors throughtheir strategic planning?
The Study Importance:
The relationship between the two markets through discussion the impacts of the macroeconomic, and
microeconomic factors on each market will provide the investors, business organizations, and decisions’ makers,
and speculators a significant aid to forecast future performance in their strategic planning.Also the portfolio managers can be benefited from the findings of this study, while deciding their assetsallocations.
The Study Objectives:
This study aims to accomplish the following objectives:(1) To discern the impact of the macroeconomic factors (GDP inflation rate, and population growth) on thetrading volume in the real estate market and prices of the stocks of the construction companies.(2) To discern the impact of the microeconomic factors (funding policies, remittances of Jordanianexpatriates, and the interest rate) on the volume and prices of the stocks of the constriction companies.(3) To discern the impact of the macroeconomic factors (The same factors) on the price index and thetrading volume in Amman stock exchange.(4) To discern the impact of micro economic factors (the same factors) on the price index and the tradingvolume in Amman stock exchange.
 
THE RELATIONSHIP BETWEEN THE REAL ESTATE MARKET AND THE STOCK MARKET
3
(5) Making links between the impacts of the nominal previous factors, to determine the relationship between the two markets.(6) To describe the impact of the existing relationship between the two markets on the strategic planning process in the Jordanian organizations.
The Study Hypotheses
(1) There is no impact for the changes in the inflation rate on the trading volume in the real estate marketand the prices of the stocks of the constructions companies.(2) There is no impact for the changes in the gross domestic product on the trading volume in the realestate market and the prices of the stocks of the constructions companies.(3) There is no impact for the population growth rate in Jordan on the trading volume in the real estatemarket and the prices of the stocks of the constructions companies.(4) There is no impact for the changes in the funding policies applying by the Jordanian banks on thetrading volume in the real estate market and the prices of the stocks of the constructions companies.(5) There is no impact for the changes in the volume of the remittances of Jordanian expatriates on thetrading volume in the real estate market and the prices of the stocks of the constructions companies.(6) There is no impact for the changes in the interest rate on the trading volume in the real estate marketand the prices of the stocks of the constructions companies.(7) There is no impact for the changes in the inflation rate on the price index and the trading volume inAmman stock exchange.(8) There is no impact for the changes in the (GDP) on the price index and the trading volume in Ammanstock exchange.(9) There is no impact for the changes in the population growth rate on the price index and the tradingvolume in Amman stock exchange.(10) There is no impact for the changes in the funding polices applying by the Jordanian banks on the price index and the trading volume in Amman stock exchange.(11) There is no impact for the changes of volume of remittances of the Jordanian expatriates on the priceindex and the trading volume in Amman stock exchange.(12) There is no impact for the changes in the interest rate on the price index and the trading volume inAmman stock exchange.(13) There is no relationship between the real estate market in Jordan and Amman stock exchange.(14) There is no impact for the existing relationship between the real estate market and the stock market onthe strategic planning for the Jordanian organizations.
The Study Model
Independent variables Dependent variableMacroeconomic variables Real estate market
 
Changes in the inflation rate.
 
Changes in GDP
 
Changes in population growth rate.
 
Prices of the constructions
companies’
stocks.
 
Trading Volume.Microeconomic variables Stock market
 
A change in funding polices (Jordanian banks).
 
Changes in the volume of remittances of Jordanianexpatriates.
 
Changes in interest rate.
 
General price index
 
Trading volume

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->