Impact of FED Rate and Energy Commodity Price on ASEAN Sustainable Stock Returns

Abstract

Sustainable stocks have been associated with low risk and low returns but can be a good longterm investment portfolio option. After COVID-19 and the Russia-Ukraine conflict, the global economy has been destabilized, leading to an increase in the FED rate and energy commodity prices, such as crude oil and crude palm oil (CPO). This study aims to examine the impact of these indicators on the returns of sustainable stock indexes in emerging markets such as ASEAN, specifically the member of ASEAN who have sustainable stock indexes i.e. Indonesia, Malaysia, Singapore and Thailand. Based on 475 research data, the study finds that crude oil and CPO prices have no significant effect on sustainable stock returns. In contrast, the FED rate has a significant negative effect on sustainable stock returns. Sustainable stocks appear to be resilient to crude oil and CPO price volatility, except for the FED rate. Therefore, investors may be less concerned about energy commodity price volatility in the post-COVID-19 period. However, investors seem more interested in shifting their investments to bank products with higher profit opportunities due to the FED rate increase and minimal risk.