Financial Technology: China’s Stock Markets vs U.S. Stock Markets

This paper provides a detailed analysis of the difference between the Chinese stock market and the U.S. stock market under the development of financial technology. In conclusion, we find that the Chinese stock market is more dominated by retail investors, but the United States owns more stocks, mostly held by institutional investors, and has a better financial mindset. The behavior of investors in the Chinese stock market is mainly the excessive speculation of investors in the Chinese market. This is one of the reasons for the many fluctuations in the Chinese stock market. Due to the speculative nature of China’s stock market, the floating ratio reflects the management mechanism of China’s stock market and helps to observe the correlation with the U.S. stock market. And technology and digitalization affect the trading of the stock market. This research is correlational, and there is no causality implied.

Wavelet-based analysis of guar futures in India: did we kill the golden goose?

PurposeGuar Gum (GG) is used in Shale oil exploration. Excessive price increase in the Guar futures market had a spillover impact on Guar spot prices and affected Guar export from India as Shale oil producers started exploring alternate sources. In this paper, the role of excessive speculation in the futures market, and its adverse impact on the guar-based agri-business ecosystem have been empirically explored.Design/methodology/approachVolatility spillover dynamics between WTI crude oil and Guar futures have been explored using bivariate-Granger Causality, BEKK–GARCH models with Wavelet multi-resolution analysis. The wavelet-based models capture the multi-scale features of mean and volatility spillover to identify the effect of heterogenous investment behavior in the time and frequency domain.FindingsThe results provide evidence that excessive speculation in futures markets increases spot market volatility. The results also suggest that the excess presence of short-term investors can destabilize the futures market.Research limitations/implicationsThe purpose of the commodity futures market is to support price discovery and risk management. However, speculative practices can destabilize these purposes leading to the failure of the business ecosystem.Originality/valueThe novelty of this paper is twofold. First, it explores the economic linkages between the spot and futures market and tests whether the presence of heterogeneous traders affects the economic linkages. Second, it models the impact of short-term speculative investment on the destabilization of the spot market.

8.5. Problems of morality in the financial sphere

В статье рассмотрены общие аспекты критики спекуляции в искажении рыночных цен и нанесения ущерба потребителям. Представлены некоторые преимущества спекуляции в принятии на себя рисков, а также дополнении информацией рынков и повышению их ликвидности. Раскрыты различия между спекуляцией, манипуляцией и раздуванием цен. Выявлены также различия между спекуляцией и излишней спекуляцией. Определено место спекуляции на рынке и ее социальная полезность в отличие от спекуляции других направлений: азартные игры, ценовая манипуляция и раздувание цен. The article discusses the General aspects of criticism of speculation in distorting market prices and causing harm to consumers. There are some advantages of speculation in taking risks, as well as adding information to markets and increasing their liquidity. The differences between speculation, manipulation and "inflating" prices are revealed. There are also differences between speculation and excessive speculation. The place of speculation in the market and its social utility in contrast to speculation in other areas is determined: gambling, price manipulation and "inflating" prices.

EFFECTIVE CROSS HEDGING: EVIDENCE FROM PHYSICAL CRUDE PALM OIL AND ITS INTER-RELATED AGRICULTURAL FUTURES CONTRACTS

Since its establishment, Crude Palm Oil futures contract (FCPO) has been used to directly hedge its physical crude palm oil (CPO). However, due to the excessive speculation activities on crude palm oil futures market, it has been said to be no longer an effective hedging tool to mitigate the price risk of its underlying physical market. This triggers the need for market players to find possible alternatives to ensure that the hedging role can be executed effectively. Thus this investigation attempts to examine whether other inter-related grains and oil seed futures contracts could serve as effective cross-hedging mechanisms for the CPO. Weekly data of inter-related futures contracts from Chicago Board of Trade (CBOT) and Dalian Commodity Exchange (DCE) are employed to cross hedge the physical crude palm oil prices. The study starts from 2006 until 2016. Empirical results indicate that FCPO is still the best futures contract for hedging purposes while Chicago Soybean (CBOTBO) provides second best alternative if cross-hedging is considered. Keywords: Crude palm oil, Crude palm oil futures, Cross Hedging, Optimal Hedge Ratio, Effective Hedging

Socializing Global Economic Governance: Introducing a Financial Transaction Tax

The uncontrolled exponential growth of the financial sector and its rapid globalization led to an equally rapid increase in challenges to the global financial system. The already undertaken measures aimed at improving financial stability are necessary, yet not sustainable enough. The aim of this article is to provide more analytical arguments to favour another solution – the introduction of the Financial Transaction Tax (FTT), and to increase the public and academic awareness of the necessity of such a measure. The ongoing reforms do not solve the key problem – the enormous cost to rescue the financial sector, subsidized to a large extent by the taxpayer, and the absence of a fair contribution from the financial sector. FTT as a tool to discourage excessive speculation without hindering other activities seems to be a socially responsible measure working for financial stability at the same time. To efficiently socialize its impact, however, it is critical to define exact patterns of spending of the funds raised by the states.