Impact of FOMC Announcement on Stock Price Index in Southeast Asian Countries

This paper examines the impact of Federal Open Market Committee (FOMC) announcements, which include information about target Federal fund rate and the revision to the future path of monetary policy, on Southeast Asian stock markets performance. It compares these effects in two periods, 1997 Asian financial crisis and subprime mortgage crisis. To do this, a sample of five national equity market indexes is analysed over the period 1997–2013 that covers 132 scheduled FOMC meetings. The result first shows that all stock markets examined do response to information in FOMC announcements. Second, target Federal fund rate has more impact on Southeast Asian stocks performance than information about the future path of monetary policy does. Third, different Southeast Asian equity markets respond similarly to target Federal fund rate, while the responses to monetary policy differ each other. Fourth, the response of each country to FOMC announcement is not statistically different in the two financial crises periods