Twin deficits increase Argentina's economic fragility

2018 ◽  
Keyword(s):  
Trade Deficit ◽  
Capital Inflows ◽  
Policy Framework ◽  
Public Confidence ◽  
Content Type ◽  
Fiscal Adjustment ◽  
Capital Outflows ◽  
Pampa Region ◽  
Global Stock Markets ◽  
Global Stock

Subject Argentina's twin fiscal and trade deficits. Significance The recent plunge in global stock markets highlighted the exposure of the Argentine economy to a negative external shock, with the exchange rate depreciating by 2.5% in the first week of February. The worsening external deficit, combined with the still high fiscal deficit, increased concerns about the consistency of the economic policy framework and vulnerability to a sudden shift in capital inflows. Impacts Capital outflows will remain high absent greater public confidence in government policy. Slow fiscal adjustment and rising foreign public debt are storing up sustainability worries. Weather troubles, such as drought in the Pampa region, could undermine the harvest, hitting exports and worsening the trade deficit.

Mexico-US NAFTA deal piles pressure on Canada

2018 ◽  
Keyword(s):  
Negative Impact ◽  
Trade Deficit ◽  
Foreign Minister ◽  
The United States ◽  
Content Type ◽  
The Us ◽  
Global Stock Markets ◽  
Dispute Resolution Mechanism ◽  
Near Future ◽  
Global Stock

Significance Global stock markets rose to a six-month high following the announcement, which does not yet include Canada. Canadian Foreign Minister Chrystia Freeland cut short a tour of Europe and flew to the United States yesterday to attend urgent trade negotiations in Washington. Impacts Trump's policies will not reduce the US trade deficit in the near future, but the deal gives him a key political win ahead of the midterms. Canada may sacrifice some dairy sector protections in exchange for salvaging NAFTA's dispute resolution mechanism. The adjustment period allowed to Mexican automakers will delay any negative impact on economic growth for years.

COVID-19 and overconfidence bias: the case of developed, emerging and frontier markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vijay Kumar Shrotryia ◽  
Himanshi Kalra
Keyword(s):  
Stock Markets ◽  
Impulse Response Functions ◽  
Economic Activities ◽  
Content Type ◽  
Long Run ◽  
Governance Practices ◽  
Global Stock Markets ◽  
Developed Stock Markets ◽  
Overconfidence Bias ◽  
Global Stock

PurposeThe main purpose of the present study is to delve into the overconfidence bias in global stock markets during both pre COVID-19 and COVID-19 phases.Design/methodology/approachThe present study makes use of daily adjusted closing prices and volume of the broad market indices of 46 global stock markets over a period ranging from July 2015 till June 2020. The sample period is split into pre COVID-19 and COVID-19 phases. In order to test the overconfidence fallacy in the chosen stock markets, bivariate market-wide vector auto regression (VAR) models and impulse response functions (IRFs) have been employed in both phases.FindingsA highly significant contemporaneous relationship between market return and volume appears to be more pronounced in the Japanese, US, Chinese and Vietnamese stock markets in the pre COVID-19 era for the relevant coefficients are positive and highly significant for most lags. Coming to the period of turbulence, the present study discovers strong overconfident behavior in the Chinese, Taiwanese, Turkish, Jordanian and Vietnamese stock markets during COVID-19 phase.Practical implicationsA stark finding is that none of the developed stock markets reveal strong overconfidence bias during pandemic, suggesting a loss or decline in the investors' confidence. Therefore, the regulators should try to regain the investors' trust and confidence in the markets by ensuring honest, fair and transparent practices. The money managers should reduce the transaction cost to encourage trading and educate investors to hold a well-diversified portfolio to mitigate risk in the long run. The governments may launch recovery packages focusing on sustaining and improving economic activities. Finally, a better investment culture may be built by the corporate houses through good corporate governance practices to regain lost trust.Originality/valueThe present study appears to be the very first attempt to gauge overconfidence bias in the wake of a recent COVID-19 pandemic.

Central bank missteps are Emerging Europe's main risk

2017 ◽  
Keyword(s):  
Czech Republic ◽  
Capital Inflows ◽  
Bond Yields ◽  
Monetary Policies ◽  
Government Bonds ◽  
The Czech Republic ◽  
Content Type ◽  
International Investors ◽  
Global Stock Markets ◽  
Equity Index

Subject The implications of a sharp rise in foreign holdings of local currency-denominated government bonds in Emerging Europe. Significance A surge in capital inflows into the Czech Republic and Turkey is increasing the scope for a disorderly sell-off in financial markets, as both the US Federal Reserve (Fed) and the ECB begin simultaneously withdrawing monetary stimulus. While international investors’ appetite for higher-yielding assets remains strong because of low (or in some cases negative) bond yields in advanced economies, emerging markets (EM) are still vulnerable to the removal of stimulus by the Fed and the ECB. Impacts Global stock markets are at record highs: the rally in the S&P 500 equity index is now the second-strongest bull run in US history. Price pressures in Central Europe, particularly core inflation, will be subdued, except in the Czech Republic. This will allow central banks to maintain loose monetary policies which in turn will support regional bond markets.

Russian outflows to continue with or without sanctions

2019 ◽  
Keyword(s):  
At Risk ◽  
Money Laundering ◽  
Capital Inflows ◽  
Private Capital ◽  
Tax Havens ◽  
Content Type ◽  
Domestic Capital ◽  
Capital Outflows

Subject Capital outflows from Russia. Significance Russia has been a net exporter of capital since 1991, and annual private capital inflows have exceeded outflows only twice, in 2006 and 2007. Attention often focuses on the use of tax havens, money laundering and acquisitions of expensive properties in European capitals, but this is far from the whole story concerning movement of assets abroad on a temporary or permanent basis. Impacts The exodus of Russian money from Cyprus will benefit other jurisdictions. The ongoing domestic capital amnesty is unlikely to lead to significant repatriation of funds. Russia's new domestic 'offshore' will be most attractive to companies at risk from new sanctions. Mispricing exports and imports will apply more to services than to goods, which are easier to track.

US moves against Chinese technology may backfire

2018 ◽  
Keyword(s):  
Bilateral Trade ◽  
Trade Deficit ◽  
Policy Framework ◽  
High Tech ◽  
Investment Policies ◽  
Content Type ◽  
Chinese Investment ◽  
Made In China ◽  
The Impact ◽  
Made In

Subject The impact of US tariffs on China's Made In China 2025 industrial policy framework. Significance 'Made in China 2025' has become a byword for US grievances against China's trade and investment policies. US tariffs against Chinese products are primarily aimed not at trimming the bilateral trade deficit, but at forcing China to abandon policies by which it hopes to challenge the US position as the global high-tech leader. As such, the tariffs target the high-tech sectors Beijing seeks to develop. Impacts China will step up efforts to reduce reliance on US suppliers. Washington may press other countries to block Chinese investment or supplies of key components. China will seek greater high-tech cooperation with Russia; Russia will oblige. China may make greater use of cyberattacks in order to obtain advanced US technology.

scholarly journals Investor attention and the response of US stock market sectors to the COVID-19 crisis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lee A. Smales
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Information Discovery ◽  
Investor Attention ◽  
Content Type ◽  
Search Volume ◽  
Global Stock Markets ◽  
Google Search ◽  
The Relationship ◽  
Global Stock

PurposeCOVID-19 has had an immense impact on global stock markets, with no sector escaping its effects. Investor attention towards COVID-19 surged as the virus spread, the number of cases grew and its consequences imposed on everyday life. We assess whether this increase in investor attention may explain stock returns across different sectors during this unusual period.Design/methodology/approachWe adopt the methodology of Da et al. (2015), using Google search volume (GSV) as a proxy for investor attention to examine the relationship between investor attention and stock returns across 11 sectors.FindingsOur results demonstrate that heightened attention towards COVID-19 negatively influences US stock returns. However, relatively speaking, some sectors appear to have gained from the increased attention. This outperformance is centred in the sectors most likely to benefit (or likely to lose least) from the crisis and associated spending by households and government (i.e. consumer staples, healthcare and IT). Such results may be explained by an information discovery hypothesis in the sense that investors are searching online for information to enable a greater understanding of COVID-19's impact on relative stock sector performance.Originality/valueWhile we do not claim that investor attention is the only driver of stock returns during this unique period, we do provide evidence that it contributes to the market impact and to the heterogeneity of returns across stock market sectors.

Country selection strategies based on quality

2015 ◽  
Vol 41 (12) ◽  
pp. 1336-1356 ◽  
Author(s):  
Adam Zaremba
Keyword(s):  
Asset Allocation ◽  
Cross Sectional ◽  
Stock Level ◽  
Content Type ◽  
Country Level ◽  
Selection Strategies ◽  
Global Stock Markets ◽  
Country Selection ◽  
Investment Process ◽  
Global Stock

Purpose – The purpose of this paper is to examine country-level parallels of the stock-level anomalies related to quality, i.e. profitability, leverage, liquidity, accruals, payout and turnover. Design/methodology/approach – The study uses sorting and cross-sectional tests within a sample of 77 countries over the period of 1999-2014. Findings – Markets populated with low-leveraged and cash-rich companies significantly outperform highly leveraged and cash-poor markets, respectively. The both cross-sectional patterns are stronger across small markets than across large ones. Furthermore, additional sorts on leverage and profitability markedly improve performance of cross-national value strategies. Finally, markets with companies with high-cash holdings earn additional premium in times of tight liquidity conditions. Practical implications – Considering the diminishing benefits of international diversification in recent decades, investors should consider the country-level quality strategies in a strategic asset allocation, and not to postpone them to a later stage of the investment process. Furthermore, investments in cash-rich markets provide a hedge against liquidity distress. Originality/value – The first study to comprehensively examine country-level quality effects across global stock markets.

China turmoil augurs badly for global markets

2016 ◽  
Keyword(s):  
Financial Markets ◽  
Composite Index ◽  
Investor Sentiment ◽  
Global Markets ◽  
Content Type ◽  
The Us ◽  
Global Stock Markets ◽  
Equity Index ◽  
Effectiveness Of Monetary Policy ◽  
Global Stock

Subject China's financial turmoil and its impact on global markets. Significance The renewed turmoil in China's financial markets in the first trading days of 2016 has undermined investor sentiment, wiping 2.3 trillion dollars off the value of global stock markets and leading to a surge in demand for safe-haven assets. While the Shanghai Composite index rebounded on January 8, it dropped again on January 11 by 5.3%, dragging down the US S&P 500 equity index, which dropped 6% in the first trading week of 2016, its worst start to the year on record and a sign of the extent to which China has become the most important sentiment determinant. Impacts The credibility of Chinese policymaking is undermined, heightening concerns about the country's slowdown and auguring badly for many EMs. Central banks will be another source of volatility, especially if investors lose confidence in the effectiveness of monetary policy. A weaker-than-expected dollar will pressure the ECB further to provide more monetary stimulus.

Winter Is Coming: Repercussions of a New COVID-19 Wave in Global Stock Markets

2020 ◽  
Author(s):  
Panagiotis Lazaris ◽  
Anastasios Petropoulos ◽  
Vasileios Siakoulis ◽  
Evangelos Stavroulakis ◽  
Nikos Vlachogiannakis ◽  
...  
Keyword(s):  
Stock Markets ◽  
Global Stock Markets ◽  
Global Stock
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