Oil Prices And Stock Market In Emerging Markets Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1150 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Investors and business analysts usually think oil prices influence stock market performances, yet few studies have shown the impact of oil price volatility on stock markets in emerging markets. To study the relationship between oil price volatility and stock market performance in the emerging markets is rather essential in that the financial markets in those countries are developing quickly and getting more integrated into global financial markets. This paper examines monthly data of oil prices and stock market indices, and conducts tests on covariance and correlation on the two variables. Don’t waste time! Our writers will create an original "Oil Prices And Stock Market In Emerging Markets Finance Essay" essay for you Create order Based on statistical inference, qualitative and quantitative analyses are derived on the extent to which the oil prices affect stock markets and how sensitive the stock markets are to oil price volatility. Introduction It is important to understand the relationship between energy markets and financial markets as it provides a good indicator of macro economy and the well-being of financial markets. Energy prices such as oil price, coal price, and propane price affect other commodity prices, which influence transportation costs, heating costs, and ultimately the stock market performance in general. In other words, to what extend does the oil price volatility affect the stock market is of great importance. Though conventionally, people associate higher oil prices with poor stock market performance or even economic crisis, it is necessary to employ empirical evidence to demonstrate such relationship. Given that the stock market capitalization in the emerging countries has grown ten-fold and the market share in capitalization has grown two-fold in the last decade (Chittedi, 2009), this paper proposes a study to examine the oil price volatility and stock market performance in the BRIC countries, nam ely, Brazil, Russia, India, and China. For emerging markets, such as Brazil, India, Russia, and China, it is rather important to emphasize the role of energy, especially oil in developing their economies. In other words, it is meaningful to examine the financial markets in developing countries that depend heavily on oil. In developing countries, higher oil price could jack up commodity prices which might cause inflation and unemployment (IMF, 2010). Specifically, this project includes collecting data on oil prices and indices for stock market performance in the emerging markets, and derives the covariance coefficients and correlation coefficients of oil prices and stock market indices. Based on statistical results, it is straightforward to conclude which markets are the most sensitive to oil price changes and to what extend does oil price affect the stock market. Furthermore, this projects looks into which industries/sectors in those economies are most susceptible to oil price vo latility; in other words, the project sheds light on portfolio diversification for risk-averse investors who are interested in emerging markets. Literature Review Traditionally, most businesses think higher oil price increase leads to higher commodity prices which in turn drive stock markets indices such as SP 500 index down. Nevertheless, not all stocks are affected equally; consumer discretionary stocks tend to perform better than the average whereas energy stocks usually perform poorly (Alpha, 2008). Some studies look at the relationship between stock market indices and various macroeconomic variables, such as inflation rate, exchange rate, and employment rate (Muradoglu et al, 2000). Using indices for international stock markets and world oil prices, Agren (2006) discovered a covariance between oil price volatility and average stock market returns in four developed countries. In emerging markets, Gay(2008) has shown that there was significant impact of oil prices and exchange rates on stock market returns in 13 countries. Spivak (2010) has discovered that the correlation coefficient between the oil prices and the MSCI World Stock i ndex is about 0.87, which translates into a moderately strong impact of oil price volatility. In addition, evidence from 1997 Asian financial crisis indicates that oil price volatility played a big role in causing the market failure or even political stability (Nandha Hammoudeh, 2007). In the last decade, the BRIC countries experienced great transformation in stock markets, mostly taking market liberalization measures to streamline the transaction process and join with developed markets (Chittedi, 2009). In other words, significant structural changes are taking place or have taken place in the financial markets of those countries. Methodology While some studies use regression analysis on stock market indices and oil prices, this project employs covariance and correlation tests across the years in order to investigate the relationship between the two variables. The analysis strives to answer research questions such as to what extent is the stock market affected by the energy prices in the BRIC countries. Among the BRIC countries, which countries exhibit the greatest influence by oil prices? Given the oil prices is globally intertwined, knowing this relationships can provide some insight into understanding the oil price and economy in a global context. To answer those questions, the study examines monthly stock market indices in the BRIC countries and oil price indicators in those countries. Those data is available on Organization for Economic Cooperation and Development website. The time frame is between June 1998 and June 2008. Covariance and correlation both show whether variables are positively or negatively rel ated, though correlation provides the extent to which the variables move together. Covariance indicates how two variables are related. Covariance determines the extent to which two variables move together and the magnitude of those movements (Grossman Livingstone, 2009). Analysis and Conclusion By graphing some selected data in scatterplot in SPSS, it is straightforward to see the directions of movement of the two variables in the BRIC countries. Based on this relationship, conclusion can be made with regard to which country is most sensitive to oil price volatility. Furthermore, one can infer from this evidence some policy implications in those countries. For example, questions such as does the local financial market fully integrated with international market or how the government should do in term of opening up and restructuring local financial markets. Statistical results from covariance tests illustrate how much the oil price and stock market performance change together. The linear dependence between two variables implies the direction of the movements and the degree of the movements. For example, a negative covariance between oil price and stock market index suggest that the oil price moves in the opposite direction of stock market index. Depending on the numerica l value of the covariance, it is possible to compare the intensity of those relationships. A zero covariance shows there is no linear relationship between oil price and stock market. Correlation test results specify whether and how strong the two variables are related (Grossman Livingstone, 2009). A correlation coefficient between -1 and 1 will be generated. The square of the correlation coefficient shows the fraction of the variation in oil price indices that is correlated to stock market indices. For instance, a correlation coefficient of +0.3 means that the oil price and stock markets move in the same direction, and 9% of the variations are related. On contrary, a correlation coefficient of -0.75 implies higher oil price is correlated with lower stock market performance, and 59.25% of the variations are related.

Jane Austen s Pride And Prejudice - 1678 Words

During the Victorian era, expectations of a demanding society were high in regards to finding a prestigious mate of good wealth and social status. The primary goal for woman from this era was marriage. After reading Jane Austen’s most popular piece of work, the effects of the high societal expectations can be acknowledged through viewing the lives of the Bennet family and friends and noting such effects. Through the examination of the characters in Pride and Prejudice it is easily deciphered between marriages based upon true love and marriage based upon the expectations of society. Society’s main goal for woman in the Victorian era was marriage. As seen many in Pride and Prejudice, marriage was the only option for most woman in the Victorian era. Since men inherited a family’s wealth, it was of upmost importance for woman, such as the Bennet sisters, to elope in order to be financially stable. A woman’s accepted career in the era was marriage (Thomas, 2014). Due to society’s aversion on allowing woman to make an income, the dependence on a man’s income was necessary. â€Å"Barred by law and custom from entering trades and professions by which they could support themselves, and restricted in the possession of property, woman had only one means of livelihood, that of marriage† (Kent, 1999, p. 86). The two main objectives most woman were in search of in a mate was wealth and social status, for this reason. Social status was a strictly enforced part of society and marriage gaveShow MoreRelatedJane Austen s Pride And Prejudice1231 Words   |  5 Pagesfinancial stability. In the novel Pride and Prejudice, Jane Austen states that the desire for better social connections interferes with the workings of love through the relationship between Darcy and Elizabeth to criticize the social class structure of the 19th century. Anxieties about social connections or the desire for better social connections, interfere with the workings of love. 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Marriage is a central issue of a woman’s life but it was even more crucial for the women of her society where women were largely dependent on the men in their lives. As a result, women pursued socio-economic stability through marriage. However, it is clear through the novel that Austen did not agree with this part of her society. In Pride and Prejudice, she gives preference to a marriage which is based on loveRead MoreJane Austen s Pride And Prejudice1304 Words   |  6 Pages Introduction In Pride and Prejudice, Jane Austen portrays themes of love, class, reputation, and marriage. From the beginning it is seen that the question of marriage is very important to the Bennet family. Upon not marrying, the girls cousin Mr. Collins will inherit Longbourn due to the absence of a male heir. This means that the family will become destitute since they won t have any support or a place to live. The only solution for them would be marriage. During this era, since women

Siddhartha Climax Apotheosis and Ultimate Boon Free Essays

The climax of a novel or another literary work, such as a play, can be defined as the turning point at which the conflict begins to resolve itself for better or worse. The climax of Siddhartha occurs in the chapter entitled â€Å"By the River,† when Siddhartha hears the word Om while standing at the river as he considers drowning himself. This mystical sound heartens him, restoring his will to live. We will write a custom essay sample on Siddhartha Climax Apotheosis and Ultimate Boon or any similar topic only for you Order Now The moment represents a turning point that eventually leads to his achievement of nirvana. One day Siddhartha’s pain becomes too much and Siddhartha sets off in a desperate search of his son, but stops as he hears the river laughing at him. He looks into the river, sees his own father whom he had left, and turns back, concluding that â€Å"everything that was not suffered to the end and finally concluded, recurred, and the same sorrows were undergone†. Returning to his hut, Siddhartha tells Vasuveda all of this, but as he does, Siddhartha notices a remarkable change in the old man. After listening to Siddhartha, Vasuveda leads Siddhartha back to the river, telling him to listen deeply. At first Siddhartha hears only the voices of sorrow, but these voices are soon joined by voices of joy, and at last all the voices are under the great sound of â€Å"Om. Realizing the unity of these voices, Siddhartha’s pain fades away and â€Å"his Self had merged into unity†. He has at last found salvation. Recognizing his friend’s achievement, Vasuveda departs into the woods to die, thereby joining the unity he had helped Siddhartha find at last. Siddhartha realizes the unity of all things in the world whic h is the apotheosis of the novel. The ferryman is a guide for both the river and the path to enlightenment. The ferryman is positioned between ordinary world and enlightenment, and those who seek enlightenment and are open to guidance will find what they need within the ferryman. The ferryman, however, shows Siddhartha how to find enlightenment within himself. The first time Vasudeva meets Siddhartha, Siddhartha wants only to cross the river, and that is all Vasudeva helps him do. Vasudeva is not a teacher who will simply tell Siddhartha what he should know, but a guide who will lead him where he wishes to go. Years later, Siddhartha searches for knowledge from the river itself, and Vasudeva guides him in his attempts to hear what the river has to say. Siddhartha himself becomes a ferryman after he achieved his goal of attaining nirvana. How to cite Siddhartha Climax Apotheosis and Ultimate Boon, Papers

Critical Evaluation and Developmental Activities †MyAssignmenthelp

Question: Discuss about the Critical Evaluation and Developmental Activities. Answer: Introduction The current study is based on the critical evaluation of Aveo Retirement Villages dividend history in past 5 years, by considering the company's dividend policy and dividend level. On the basis of the analysis, recommendation on preferred policy and dividend level will be provided and an appropriate conclusion and reasoning will be briefed at the end. Aveo Group Limited is into the business of development, operation and management of retirement communities. There are various activities the Company is involved into but principally top in list are investment in retirement villages and their development and management; developmental activities for the purpose of used properties like resale of land as well as residential, commercial, retail and industrial property; it also makes investment in, and does management of real estate sectors income-producing retail, commercial and industrial property; building of commercial, industrial and residential nature and construction for the Company, and management of funds and asset (Annual report of Aveo Group, 2017). There are two segments through which the company operates, namely retirement and non-retirement real estate segments. Retirement segment develops and operates into retirement villages and specific aged care facilities so as to produce rental and other income. The other non-retirement segment develops the residential, commercial and retail property for public and is not segment specifically. Past 5 years dividend history of AVEO Group Limited Table 1: Aveos Dividend History Aveos Dividend History 2013 (in ) 2014 (in ) 2015 (in ) 2016 (in ) 2017 (in ) H F Result - 4 5 8 9 Final 1 - - - - Interim - - - - - Table 2 Aveos Dividend Yield Aveos Annual Dividend Yield 2015 2016 2017 Annual Dividend Yield (in %) 1.9 2.5 3.2 Aveos Annual Dividend ((in ) 5 8 9 Table 3 Aveos Return on Equity, Shareholders Return and Dividend Payout Ratio Aveos Group Limited Particulars 2013 2014 2015 2016 2017 Return on equity (in %) 4.2 8.8 5.3 Shareholders Return (in %) - - 27.7 26 -9.5 Payout Ratio (in %) - - - 29 50 From the Table 1 given above, it is clear that Aveo Group Limited has distributed the small sum of dividend in a period of last 5 years but in an increasing fashion. Therefore its dividend payout ratio is showing a rising trend from 29 to 50 in Figure 3. Also according to Table 2 given above, the Annual dividend is gradually rising in order from 5-8-9 and so is its dividend yield. That is a very systematic and planned way a company has distributed to its stakeholders in last few years in an increasing order satisfying the gut of an investor, which would mean that the company has not shown any disappointing performance. Critical evaluation of dividend history and earnings per share As per the statistics are given in Figure 1 and Figure 2, read with Figure 3 given above, the Company has consistently paid rising dividend since 2013. Also, the earning on the equity has risen from 2015. According to which it can be said that the company payout history is growing with payout ratio rising to nearly double from 2016. Although the shareholder's return shows a negative fall in 2017 but cannot be treated as a negative feedback in entirety. Year Securities price at year-end (in $) Profit after tax ($m) Price-earnings ratio 2013 1.27 39.2 9.3 2014 2.06 42.1 21.7 2015 2.58 54.7 23.7 2016 3.17 89 18.6 2017 2.78 108.4 14.7 Based on the statistics provided in the figure above, Aveos security prices, as well as the profit, earned after tax is showing an ascending order. This shows that the company is in its growth period and is well to do in order to attract and satisfy the investors intentions as that of a profitable stock (Aveo Group (AOG), 2017). The stock is recommendable to investors looking at it rising payout in addition to its profits, dividend and stock price over the period of 5 years. Conclusion Based on the dividend distributed and the dividend payout the company seems attractive and reasonably well to invest into looking at the real estate industry growth trends in mind. Since the company is systematically and in a planned manner gaining earnings for its investors, it is expected to do well in the foreseeable future (Renneboog and Szilagyi, 2015). Since the consistently rising profits is favourable, adopted policy by the company is viable. References Annual report of Aveo Group. 2017. Available through https://www.aveo.com.au/wp-content/uploads/2017/09/AVEO-2017-Annual-Report.pdf. [Accessed on 6th October 2017]. Aveo Group (AOG). 2017. [Online]. Available through https://www.investsmart.com.au/shares/asx-aog/aveo-group. [Accessed on 6th October 2017]. Renneboog, L. and Szilagyi, P.G., 2015. How relevant is dividend policy under low shareholder protection?.Journal of International Financial Markets, Institutions and Money.