Impact of Macroeconomics Variables on the Islamic Stock Market Returns in Saudi Arabia
CHAPTER ONE: RESEARCH OVERVIEW
1.0 Background of the Study
Stock market serves an important role in regard to the distribution and allocation of scarce commodities to the most operative users as therefore serves mainly as the channel through which funds move from the addition to deficient industry (Bellalah, & Masood, 2013). Stock market can best be described as the market that gathers both the purchases and vendors of stock in the business world. Stock market remains to be among the most essential sectors that influence the wellness of the economy. It that it serves as a ground that permits public shares trading. In the last few years, the association amid stock returns and macroeconomic variables has created a rather intense discussion among financial and macroeconomists analysts and investors. Based on literature stock pricing is mainly driven by some of the prevailing macroeconomics variables which are not clearly illustrated by the existing pricing theories (Bellalah, & Masood, 2013). The Islamic Stock Market in Saudi Arabia owns the customized characteristics of an operative industry which has the capability to control stocks pricings patterns within the economy.
Some of the dominant macroeconomics variables that influences effectiveness in the stock industry includes exchange rates, financial supply, interest levels and industrial and consumer Price indexes. These variables are mainly applied in the market as they depict either desirable or negativity within the market. The above mentioned macroeconomic variables have a crucial connection with stock pricing based on the fact that they are fully able to play part in stock costs predictions. In this context this notion is supported by Hassan, (2017) the variables are not only essential but they are highly significant in regard to justifying pricing patterns in the stock market. The operational nature of the market is present when the stock prices specifically reflect positivity. In that, the prices can be utilized to assess and understand the operation of the market. In that, with all this information the public, as well as investors, can fully be able to predict future stocks prices and the associated returns. However, excessive return in the market cannot be earned if the players are not willing to take extra risks within an operational market. Based on the Arbitrage Pricing Theory (APT) different macroeconomics forces such as an anticipated inflation, interest rates, and industrial performance affects the stability of the stock industry (Hassan, 2017). The argument that macroeconomics variables mainly affect the guides of the stock market has been proven to be a well-grounded notion as demonstrated by economics finance literature. It is in the last two decades that the market has experienced rapid changes based on economic adjustment and globalization in general. This has resulted in more and more researchers focusing on understanding the primary influence of macroeconomics but these studies are mainly grounded on the well-established markets such as those in Asia, USA and Europe (Hassan & Bashir, 2003). Few studies have however been based on the emerging markets despite their remarkable performance and potential to develop their respective economies in the future.
On the other hand, based on the behavioral theory it is evident that responses by the public and investors in using their psychology to determine the shares values within the market also affects the general pricing (Hassan & Bashir, 2003). In that when the stock prices go up resulting in increased earnings for the investors the trend attracts even more buyers. In this context, even after the increase in investment the general prices will increase further based on the demand and if this event is continuous this will create even more positive anticipation from the investors thus the expanded bubble will automatically be subjected to overflowing leading to reduced priced created by the increased and consistent expectations. This is fully illustrated by the Global financial crisis of 2008 which was mainly driven by increased investment and high earning expectations in the market. In the last couple of years, the Islamic stock market has acquired substantial attention on the local as well as the global setting (Hassan, 2017). This has, in turn, led to the creation of huge capitals for the Islam and non-Muslims states. The Islamic finance market is particularly directed by the standards and rules of the Islamic Law which is widely recognized as Sharia which forbids interests and extreme risks participation, betting while it promotes revenue sharing, collaborative risks, ethical financing and financial transactions that are well supported by assets (Hassan & Bashir, 2003). One of the primary features of the market that have gathered high levels of consideration is the growth of Islamic fairness guides that are created with the aim of following the performance of firms that adheres mainly to the Sharia laws. The Islamic guides are mainly uncovered from the demanding screening with respect to business operations and financial proportions. There are numerous guides that are in existence are situated in distinct nations and economic sectors and Nifty50 is the leading one that is situated in India (Habib & Islam, 2017). This is categorized to be one of the largest and most liquidities are within the Stock Exchange industry (Habib & Islam, 2017).
While the rather complex and extensive association amid macroeconomic variables and stock earnings have been investigated widely in the recent there are few studies that have been dedicated in regards to understanding the effects of these variables on the Islamic market. In addition to some of the well-performing industries such as Saudi Arabia studies have shied away which is cited on the complexity of the Islamic law (Bellalah, & Masood, 2013). This study established that the Islamic Stock Market returns are highly vulnerable based on the Islamic law influence which mainly prohibits extreme risking and interest rate. It is also argued that based on the fact that the Islamic guidelines are part of the economy drives the market’s interest rates and this trend might be affecting the functioning of the market in an indirect way. The study also follows the notion that there are a number of methodical jeopardies that are derived from macroeconomic variables in the industry (Hassan, 2017).
1.1 Problem Statement
The association amid stock market and some of the leading macroeconomics forces has grown into a prevalent and yet sensitive subject in the financial industry research. It cannot be denied that Stock market is particularly an important part of the contemporary economy because it serves an essential responsibility in regard to the industrial as well as economic development. Stocks industries offer support to any country’s monetary and monetary policies. In that, this incorporates the assessment of the marketable securities on the ground of the existing demand and stock provision (Hassan & Bashir, 2003). It is such estimates that are exceedingly essential and crucial for use across different sectors as governments, public and investors utilizes the assessment in making a prediction in regard to the market. In addition, the operations of the stock market also have direct implications on the growth of the economy. This is the rationale behind the fact that industries, financial institutions, and governments globally are highly concerned in regard to the happenings in the stock market as the failure of the sector can have immeasurable undesirable effects on the economic wellness. In real nature, the stock market is accounted as an unequal one because it is not fully equal given that the distinction amid the negative and desirable earning might not be balanced (Hassan, 2017). It is in this context, very important to approximate and assess the macroeconomics forces relationships with the stock's pricing based on an unequal approach. The leading macroeconomics variables that are connected to the stock market incorporates, interest and exchange rates, funds supply, Consumer price guides and industrial generation index. These factors were established to having a substantial effect on the stock market returns.
1.3 Research Objectives
1.3.1 General Objective
The current research study will mainly seek to establish the significant association and effects of macroeconomic forces and Islamic Stock market returns in Saudi Arabia. This research will, therefore, focus on a number of variables which are exchange rate, funds supply, interest rate, industrial creation and consumer pricing guide in the long run.
1.3.2 Specific Objectives
- To determine the association amid macroeconomics factors and the Islamic market a case study of Saudi Arabia
- To determine the different macroeconomic factors and their impact on the Islamic stock markets earning.
1.4 Research Question
- What is the long run and short run association amid Stock return and macroeconomics factors which includes interest and exchange rates, funds supply, industrial production and Consumer Price Index?
1.5 Study’s Hypothesis
The study found out that there is some significant association amid stock market earnings and macroeconomics variables within the Islamic Stock market in Saudi Arabia. To begin with, according to Espinoza & Prasad (2010) exchange and interest rates are directly connected to stock markets earnings. In that, if the interest rates are high this might result in a depreciation of the general earning in the market thus leading to a lower exchange rate that is associated with minimal returns. In the incidence where the interest rates are more this implies that the borrowing expenses are high as well as individuals tend to deviate from borrowing and focus on depositing. This trend, therefore, leads to minimal investment which implies that the earning within the stock industry is bound to be low which thus creates negative correlations. On the other Industrial production, variable is mainly utilized in assessing the actual economic operations and real generations as well as returns from the stock exchange. This aspect has effects on the anticipated financial flow s in general. In this context, the variable is likely to lead to excessive profits in the industry and as the activities increase the earning and generation also rises to some high and desirable levels (Mustafa, 2008). In other words the rise in industrial production results in increased profits as well thus industrial production creates a positive association with market returns in the industry.
Consumer Price Index is the inflexible living cost that serves as the procedures of an inflation degree. There is rather undesirable association amid the variables given that in the instance when the inflation level is high then the living cost heightens thus changing the spending of the public towards consumption (Espinoza & Prasad, 2010). Consequently, the rise of the inflation level will mainly constrain the monetary provisions thus having some undesirable effects on returns. In this context, this research does not support the hypothesis that CPI and stock returns form an undesirable relationship in Saudi Arabia. Money supply remains to be one of the most influential subjects in regard to stock exchange in general. In that, it refers to a monetary instrument that has a direct effect towards the financial system. In that, according to Mustafa, (2008), there exists a positive association amid money supply and stocks returns in Saudi Arabia. In that, if the fund's provisions are high this leads to increased liquidity thus the interest levels decreases while investment demand from the public remains high. Eventually, the trend results in increased returns in the Saudi Arabian stock market. Thus, this research supports the hypothesis that money supply has a significant connection with Stocks returns in the Islamic market.
1.6 Significance of the Study
The current study is aimed at establishing the association and the effects of macroeconomic variables on the Islamic Market earnings in Saudi Arabia’s Stock market (Almazari, 2014). Focusing on the previously mentioned variables this research will particularly contribute to the evaluation of the effects of macroeconomic factors on the performance of the stock market and the earnings in general. Focusing on the macroeconomics factors will generate some useful information and can, therefore, act as an essential prediction element for the different users ranging from policy developers, government, the public, and stockholders. Based on the latest insights the Islamic Market in Saudi Arabia is one of the most potential based on the existing financial opportunities but it remains vulnerable based on the constraint that is projected by the domination of the Islamic law (Almazari, 2014). This, therefore, raises the need of focusing on a detailed research on the market.
This study is of essence because it will contribute to the existing information in regard to the macroeconomics variables influence on the stock market. This can be utilized as the basis for advancing research in the future based on the acquired findings. The policy developers in the Saudi Arabian can utilize the study’s findings as one of the most essential tools in regard to evaluating the source of the market’s vulnerability thus focus on stabilizing the market earnings for the wellness of the economy. In addition, this would also be useful to the policy developers in conducting monetary analysis thus allowing them to follow the most accurate directions while settling for some accurate decisions in general. From the shareholder's view in Saudi Arabia and, the information can mainly be utilized to gain a more enhanced comprehension in regard to the stock market flow as well as forecasting the stock market patterns in Saudi Arabia. Therefore the information can be utilized as an influential instrument in projecting the shifting patterns in the industry which will work to ensure that their choices are rational in regard to purchasing or selling stocks. Further, the study will create increased awareness as well as familiarity in regard to the subject while relating to the existing policies and their effectiveness. This might result in generating a number of feasible and effective solutions that are mainly aimed at addressing the issue. The government and shareholders as the managers of funds can adequately and appropriately offer the most suitable provisions to the consumers. Therefore, the information can be utilized in positioning the market more strategically. It is without a doubt that the study will open more opportunities for researching the market further and also assist in forecasting demand and earning as well as acting as a guide that ensures that decisions are not made based on the earning but based on the market state. In that high investment leads to decreased earning thus the information can be utilized in guarding economies against recession since the stock industry is one of the primary players.
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
In examining the association amid stock market returns and macroeconomic variables a number of journals and books as the secondary sources were utilized to justify the raised claims. The association amid the two has acquired popularity in the stock market setting across the globe and particularly in some of the large emerging markets such as Saudi Arabia, Islamic region, Asia and so on. Some of the conducted previous studies empowered the researcher to establish the specific macroeconomic factors and their effects on the stock market earning while conducting this investigation. This chapter is mainly focused on the acquired findings from the consultation of the existing literature.
Figure 1: Conceptual Framework of the macroeconomics variables that affects stock markets returns on Islamic Stock Market returns in Saudi Arabia.
Dependent Independent Variables
2.1 Review of literature
2.1.1 The Relationships and Effects of Macroeconomic Variables of Stock Market Returns
The association amid stock directories and all the leading macroeconomic factors ranging from inflation, GDP, Exchange and interest charges, and money supply among others have mainly been addressed by most researchers. Almazari, (2014) suggests that stock gains are mainly affected by a number of microeconomics factors such as industrial generation, inflation and interest charges. On the other hand Jarrah & Salim (2016) investigated mainly on the connections amid stock gains and macroeconomics factors and established that there is an undesirable connection amid inflation and returns. Some other studies conducted by Johnes, Izzeldin & Pappas, (2014) also established a negative association amid stock returns and inflation.
However while Cihák,n& Hesse (2008) was investigating on NYSE stocks the study settled for a positive association that is in relation to industrial production, interest charges and the return on interest. In addition in a different research that was grounded on the Japan market a more positive association amid different macroeconomic factors and the country’s stock market revealed a positive association basically in the long and short run basis in addition to the stock pricing. In addition, in a study that was conducted by Cihák,n& Hesse (2008) it was established that the existence of increased rates of inflation leads to decreased performance within the finance industry. This was the results that were mainly obtained from the study in more than 60 countries. There are several attempts on investigations that have been made in regard to attempting to establish the general effects of these factors in relation to macroeconomics on the traditional stock guidelines in the cause of Saudi Arabia. In that, it is accounted that the stock industry remains to be among the essential sectors with reference to the general settings of these countries’ economies in general. Therefore if they are not in operation then the economy in the region is affected drastically.
Based on a study that was conducted by Waemustafa, & Sukri, (2016) a negative association of inflation in an operational economy was also revealed in general. On the other hand in a study that was based in Malaysia, it was established that in general exchange and interest charges tends to affect gains in the stock market while in the case of funds supply a more positive association was established. The long-run association of the variables namely funds supply, CPI and exchange charges were investigated within the Middle-Eastern region and it was established that there is no association of these variables within the stock returns in the region as it had been anticipated but the same variables demonstrated significant impacts in Malaysian Islamic Stick market (Sutrisno, 2017).
Given that most of the conducted studies are mainly grounded in the developed states and other developing markets such as Malaysia there lacks adequate information in supporting the situation that is prevalent in Saudi Arabia. In this context, this study is aimed at bridging the existing gap in literature in reference to the effects of macroeconomic variables on the Islamic Stock market gains in Saudi Arabia. This will be accomplished on the foundation of the literature review that follows.
2.1.2 Stock Market Return
The amount of earning that is acquired by shareholders from all the invested capital gains as well as bonuses from the stock market is what is referred to as Return. It is critically important to attain a comprehensive understanding of the association amid stock market as well as financial growth which plays part in assisting the shareholders in forecasting the underlying trends within the market for more informed investment choices in reference to stock market operations (Sutrisno, 2017). With the presence of detailed understanding in regard to the association, the private, as well as the public sectors, can effectively guarantee effectiveness in regard to the development of policies that serves well in creating directions. The Random Walk Theory notes that the pricing in the stock market is bound to change rapidly and completely based on any leaking insights. Therefore the information that influences these changes is mainly grounded on the responsiveness of the stock value. Based on the fact that the Islamic law dictates that excessive interest charges and risks cannot be taken Waemustafa, & Sukri, (2016) asserts that the Islamic stock market is vulnerable and despite the fact that it is characterized with the highest form of growth it has remained weak and ineffective. This is based on the fact that based on the dominance of religion in the region the stock market companies remain closed in several hours daily to enable the populace to engage in players and remains closed fully on Fridays. This, therefore, implies that it becomes particularly difficult for the investors to obtain the needed insights while needed which slows down the general rate of investment in general.
Based on the findings of the prior studies the association and macroeconomic forces and market return equity is important. In that, the variables play part in determining whether the earning is to be desirable or low (Sutrisno, 2017). It was established that in the emerging markets such as India inflation, funds provision, exchange, and interest’s rates have direct implication on the equity market gains. In that when the interest rate is high this implies that the investors and buyers forego the need to invest in stocks thus focusing consumption and with low investment, the earning becomes low based on minimal exchange prices and buying demand. With inflation also the general living cost tend to heighten thus forcing the investors to uphold their needs and invest in other fewer riskier activities in general. In this context, it was established that with reduced money supply in the industry this implies the investment in the market to acquire more stocks is decreased thus creating a negative association. In the research by Arshed, Riaz & Khan, (2017) the researchers determined a stable association amid GDP and Stock Returns. Most of the emerging markets with Saudi Arabia included are fully characterized by more improved gains in general thus with a stable economy the general earning tend to be higher as the consumers are exposed to more investment funds that are to be utilized in acquiring more shares. However, if the GDP decreases the gains lowers as well due to the decreased demand of the stocks in general (Sutrisno, 2017). The effects of the variables differ from a nation to another in general based on the money supply and the state of the economy.
Sutrisno, (2017) evaluated the association stock market index and the dominating macroeconomic variables. The findings clearly demonstrate that there is an essential association amid the general stock pricing and the variables. While for the research on the Islamic nations Habib, & Islam, (2017) investigated on the association amid the stock return in Saudi Arabia and macroeconomic forces through the use of Error Correction approach. The study’s findings demonstrate that the exchange charges and the economic GDP will definitely impact all the classifications of returns. There is a rather undesirable association amid Portfolio gains and the level of inflation, money supply, and exchange charges, particularly for the large and medium corporations.
2.1.3 Exchange and Interest Rates
Exchange charges can best be measured mainly based on a comparison of two distinct nations (Sutrisno, 2017). In that, this can basically be described as the share of a single currency as articulated in a different one. The association amid the variables has in the recent gathering the focus of most researchers as well as shareholders in projecting future operations in the stock market. Most of the studies that have conventionally attempted to determine the effects of exchange rate and equity return have demonstrated that returns are negatively impacted by the exchange charges. One of the recent studies conducted by Waemustafa, & Sukri, (2016) mainly investigated on the association amid macroeconomic factors and stock gains within a period of ten years which began on 2005 and was mainly accomplished through the use of monthly analysis based on the released reports. The study’s findings revealed that it is just the exchange charges that are associated with a substantial undesirable implication in reference to stock gain. In this context, the study demonstrated that all the other macroeconomic variables held no substantial implication in reference to returns.
According to Jarrah & Salim (2016) stocks, returns are bound to be affected rather negatively by the volatility of exchange charges for instance amid Dollars and. This research utilized differentiated models within a lifespan of 7 years from 2002 (Saiti, Bacha, & Masih, 2016). The findings of this study demonstrated that the appreciation of the dollar currency creates an undesirable implication in reference to returns. This is justified by the explanation that the appreciation of the dollar results in the heightening of products prices in general when being equated to those from the foreign markets which leads to increased imports while exports drop which thus implies that the gains are low. On the other hand with the appreciation of foreign currencies, the local one will be subjected to depreciation and this leads to increased markets gains in the long run (Saiti, Bacha, & Masih, 2016). On the other hand in the short term, this trend will lead to decreased gains until the situation is stabilized. In other words, the studies concluded that exchange rates mainly have undesirable effects of the markets equity. In the presence of inflation and high-interest charges the relationships are even worse given that it creates a rather negative correlation. In that, the investment level decreases as the shareholders tend to shift their funds to other sectors which are associated with higher gains and less operating threats in the short run. Interest rate is an essential macroeconomic factor that holds immediate effects on the economy. In that, the best perspective of analyzing its effects on stock returns is based on the viewer of the borrowers (Saiti, Bacha, & Masih, 2016). In that, if the rates are high the borrowers are unwilling to participate in general thus focusing on saving.
2.1.4 Industrial Production Index
GDP can best be described as the total value of products and services as provided in the market within a given economy in a specified period. This is certainly a prevalent strategy that is utilized in assessing the country’s economic performance as well as revenue generation. In this context, the performance and production of industries, in this case, will be utilized as the representative of GDP because the output represents the performance of the economy. Islam, & Habib, (2016) States that there is a positive association amid stock return and industrial production. In that, the association is only present in instances where there is increased production that will ultimately lead to the acquisition of high revenue that will automatically lead to the wellness of the companies. In this context, with her returns then the production is also higher and the cash flow in the economy is at the pick hence the earning in the stock market will eventually rise. In addition, to this, it has been established that there is a positive association amid market returns and GDP. These findings are similar to the findings by Dimic, Kiviaho, Piljak & Äijö, (2016) which asserts that the desirable connection amid the two is mainly fueled by the presence of increased money flow that is generated in the presence of high production.
The general development of GDP mainly influences the rise of stock gains as it stipulates the increase in regard to profits in the market (Dimic, Kiviaho, Piljak & Äijö, 2016). The aggressive earning increase is bound to have major effects on the earnings as well. However, the association is not a guaranteed one because there are a number of forces that mainly play part in developing the economy in general but the effects are ones which might not be at the reach of the stock's investment. In that, the income increase is only bound to result in a positive effect on the stock market only in the instances that the profiting ratios are not equal (Islam, & Habib, 2016). However, the increase in regard to stock leads to a decline in the acquired returns in general and this is accounted as one of the major inconsistencies. On the other hand, according to, the association amid the actual market gains and per capital increase are seen as negative in a number of countries. In that, in most cases, the economy will experience a desirable growth based on a number of aspects such as employment increase, income rise, and increased savings and these aspects fail to offer any benefit to the restock investors. The quick technology advancement creates a number of advantages to the consumers by basically raising their living state but not on stocks demand. In this context, individuals are more focused on investments which in turn increases their earning but has little to do with the market development (Islam, & Habib, 2016). Thus the GDP growth is associated with minimal effects in reference to the performance of the stock gain in the nation.
2.1.5 Consumer Price Index
Based on a 2016 survey on Saudi Arabian economy it is shown that the country’s inflation rate has been less than 3 percent in the last three years. CPI is the main substitute while accounting for inflation. In Saudi Arabia, some of the leading CPI classification is grounded on housing, fuel, gas, food among others. Consumer prices increased by about 1.7 percent as per 2015 (Dimic, Kiviaho, Piljak & Äijö, 2016). An extensive rise in regard to the level of goods as servicing prices in a nation is accounted for inflation. In that, with the rise of goods prices than the general value for money decreases, which then implies that the purchasing authority within the exchange level is low. With the rise of the general prices then it implies that consumers are bound to purchase fewer units since the expenses are high. In such a scenario the will and the ability of the consumers to play part in any investment is affected gradually. This implies that it is them that the stock earning becomes low as the demand goes down. Based on Bhaloul, Mroud, & Naifar (2016) Inflation can best be accounted for while focusing on the expected and unexpected aspects. In that, this implies that inflation should be assessed based on the prevailing economic forces in general. It has thus been illustrated by the investigations that with the presence of inflation then this account to rather negative gains in reference to returns.
In that even while focusing on the long run relationships amid the variables it because evident that inflation will lead to decreased returns. This is mainly derived from the fact that the involved companies might not be able to adjust their prices in general as the pricing is utmost while the buying is minimal. More so in a study that was mainly conducted by Dohaiman, (2017) it was established that the real operational economy and stock earnings are dominated by a rather positive association because with inflation the prices of stock decreases which implies that the acquired gains are irrelevant and might even lead to losses if the situation is severe. In other words it is rather evident that when the general performance of the economy is low due to the increased products prices consumers mainly focuses on minimal spending which in turn implies that the stock gains will be reduced as low demand leads to decreasing the stock prices in an attempt to attract more consumers in general (Ibrahim & Musah, 2014). The undesirable relationship is evident on all nations regardless of the state of the economy and size as the willingness of the consumers to be part of the operation will be minimal not only based on the associated risks but also the inability to invest.
2.1.6 Money Supply
Money mainly refers to the most liquid asset in existence based on the notion that it is a primary channel that determines the effectiveness of trade (Ibrahim & Musah, 2014). Besides money is useful in economizing in reference to the general utilization of inadequate resources within the economy. In this context, this implies that money can mainly be utilized in ensuring that trade occurs as well as customization of activities in the economy. Money supply basically refers to one of the most fundamental determinants of stock pricing in general given that it acts a rather vital responsibility being the indicator of economic anticipations (Bhaloul, Mroud, & Naifar, 2016). There are a number of studies that have focused on the association amid stock return as well as monetary supply. Money supply is bound to impact the general pricing of shares which can either be positive of undesirable based on the rate. In that in instances when the supply is high this implies that the stock prices are high as well which is associated with desirable returns in general. According to Ahmad et al (2015), inflation, as well as the supply of money, are associated in a rather positive manner. In that money provision and inflation are positively associated with one another and an increase in the supplied money can lead to increased discounts level and a decrease in market pricing. On the other hand, the increase in regard money creates increase money flow in the economy which generally implies that the demand for stock is heightened.
In the existence of increased demand the prices rise leading to high return as the sales rate is higher when equated to the initial buying cost of the shares. In this context money supply has a positive correlation with inflation. In that when money provision in the market is high it means that inflation will rise due to the existence of valueless money and also the expectations for higher returns will heighten (Dimic, Kiviaho, Piljak & Äijö, 2016). In such a situation the general value of all the involved firms decreases thus forcing the decrease in stock prices. With reference to the existing theories, there is a negative as well as desirable correlation amid money provision and stocks return. Based on Mofleh (2011) it is demonstrated that funds supply is most likely to have a number of implications on the stock pricing in different ways. In that to begin with, uncertainty in regard to the future will obviously affect the general performance of the companies. In addition, if the exchange rates are high this implies that the economy will suffer from minimal investment. In addition, if the supply is a stable one then the relationship is a positive one as consumers will not suffer from uncertainties.
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