The Impact of Macroeconomics, Market Return, Financial Performance, Market Perception, and Covid-19 on Stock Returns on Telecommunication Tower Companies in Indonesia

Fredyansyah, Teguh and Sembel, Roy and Malau, Melinda (2023) The Impact of Macroeconomics, Market Return, Financial Performance, Market Perception, and Covid-19 on Stock Returns on Telecommunication Tower Companies in Indonesia. South East Asia Journal of Contemporary Business, Economics and Law, 29 (1). pp. 13-23. ISSN 2289-1560

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Abstract

Along with the rise in internet users, digital penetration is getting stronger in Indonesia. Even though the COVID-19 pandemic is more manageable, connecting to the internet is still necessary. This heightens the appeal of the telecommunications infrastructure industry, including tower ownership and operation. Previous research on fundamental factors and stock returns in the tower telecommunication sector has shown limited exploration. The COVID-19 pandemic may impact market reactions, with overreaction causing perceived risk and optimistic investors valuing tower telecommunication companies' prospects. This study aimed to analyze and evaluate whether there was a difference in stock performance and the effect of fundamental factors on stock returns in the telecommunications tower companies listed on the Indonesia Stock Exchange from the third quarterly 2017 to the fourth quarterly 2020. This study used Industrial Production Index (IPI), Inflation rates, Exchange Rate, Market Returns, Return on Equity (ROE), Current Ratio (CR), Total Asset Turnover (TATO), Debt-to-Equity Ratio (DER), Price-to-Earnings Ratio (PER), COVID-19. This study used stock returns and stock risks as the dependent variable. This study used the Wilcoxon test, F-test, and panel data regression to test all the hypotheses. This study found that the inflation and PER is proven to influence stock returns highly significant. In contrast, other independent variables IPI, Exchange Rate, Market Return, ROE, CR, TATO, DER, and COVID-19, have no significant effect on stock returns of telecommunication tower companies. The result of this study supports the efficient market hypothesis, which states that stock prices reflect all available information, including fundamental information. Telecommunication tower companies should be able to deliver information regarding company performance to investors so that they are well informed, get comprehensive input, and be confident about their investment. Management who run the telecommunication tower companies are encouraged to analyze, maintain, and improve the company's financial performance that affect to company’s stocks returns Based on this research, the inflation and PER is very important to observe because they have a significant effect to stock return on the telecommunication tower in Indonesia. Keywords: Macroeconomics, Market Return, Financial Ratios, Stock Returns, COVID-19.

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