Stock Market Indicators and Domestic Market Capitalization of Emerging Markets

Abstract

Market capitalisation plays a significant role in the performance of emergingstock markets. This study, therefore, analysed the trend of Dar es Salaam StockExchange ' s (DSE) indicators on its domestic capitalisation. Specifically, thestudy analysed trends of stock market indicators, namely, individualparticipation, share volume, share turnover, and DSE All Share Index. Timeseries monthly data from 2014 to 2020 were analysed using the ARMA model.The study further examined how the stock market indicators influence thedomestic market capitalisation (DMC) of DSE using the ARMAX model. Resultsindicated that individual participation, turnover, and the DSE All Share Indexsignificantly influenced DMC. However, the volume of shares traded did notinfluence DSE's domestic market capitalisation. Hence, DSE's performance isassociated with share turnover, price, and public participation. Thus, the studyurges stock brokers to reduce transaction costs to attract individual investors. Italso recommends that DSE encourage new listings to trigger trading andincrease the market share index. This study's results can help the governmentimprove policies and plans to increase public participation, reduce incomeinequality and improve the economy.Keywords: Market Capitalisation, Share volume, DSEI, Individual participation