Macro-Economic Determinants of Mining Companies' Share Returns in South Africa

The study was undertaken due to underinvestment in the mining sector and a need to enhance confidence in management and potential investors within the mining sector. Also, there are a few studies undertaken in this area for emerging markets. Africa at large has huge deposits of vital mineral resources that are needed at the global level, and the minerals possess the potential to uplift the African economy to a first-world economy. The study aimed to investigate the macro-economic determinants of mining companies' share returns in South Africa. The study adopted a quantitative research methodology, and the System Generalized Method of Moments (GMM) was employed using panel data from ten mining companies that are listed on the Johannesburg Stock Exchange (JSE) for the period from 2013 to 2021. The collected data was analyzed using E-Views, which resulted in the derivation of correlation and regression analysis. The results were considered significant at p<0.05. The results from the study show evidence of a positive and significant relationship between gross domestic product growth (GDPG) and share price (0.30). A positive and significant connection between GDPG and total returns (TR) was also noted, with a value of 721.8. The association between interest rate and share price (0.67) shows that there is a positive and significant relationship between the variables. The results also reveal that there is a negative but significant relationship between interest rate and mining sector stock returns (-275.1), and a positive and significant relationship exists between interest rate and total returns (827.2). It can be noted that there is a positive and significant relationship between inflation and mining sector stock returns (26.5), while a negative and significant relationship exists between inflation and total returns (-219.7). It is therefore recommended that the central bank, through the monetary policy committee, should keep the interest rate low to make the cost of borrowing cheaper for mining companies while ensuring that it is able to maintain inflationary levels within the set targets.