Macroeconomic variables for predicting bear stock markets of Taiwan and China

PurposeThis research examines how macroeconomic variables can precisely predict bull/bear stock markets in China and Taiwan.Design/methodology/approachThis paper adopts a two-state Markov switching model to characterize the bull and bear markets spanning from 1994 to 2019 and then conduct a bear stock market predictability test by running regressions between the filtered probabilities of bear markets and a series of macroeconomic variables in turn at different horizons of 1, 3, 6, 12 and 24 months.FindingsThis paper shows that inflation rates, changes in real exchange rates, and foreign currency reserve growth are key predictors of bear markets in China, while term spreads, unemployment rates and foreign reserve growth are major factors that can predict bear markets in Taiwan. Remarkably, industrial production growth does not have predictive power for bear markets, which may suggest emerging markets are driven by fund flows rather than real economic activities. Besides, the impact directions of foreign currency reserve growth are opposite, which may be due to different proportions of the financial accounts in their balance of payments.Practical implicationsIn practical respect, this paper provides market participants the usefulness, impact direction and implications of bear market predictors when building their market-timing strategies in China and Taiwan stock markets. The government institutions may also thereby make appropriate policies to prevent huge stock market downturns and serious drawbacks.Originality/valueIt highlights the “fund-driven market hypothesis” and “foreign currency reserve effects” that commonly dominate Taiwan and China stock markets since both are highly affected by international funds.

Study of the Critical Collapse Cave Span for Fracture-cavity Oil Storage Karst Caves

As the major field in petroleum reserve growth, fractured-vuggy reservoir is the key research in the future. However, in the development of fracture-cavity reservoir, collapse may occur in karst cave which greatly affects the oil well output. In order to forecast the cave collapse before drilling, this work adopts the method of span dichotomy reduction to determine the critical karst collapse of the fracture-cavity reservoir cave on the background of Tahe Oilfield’s fractured-vuggy reservoir. Different factors which influence on the tunnel span of karst collapse and the failure modes of collapsed cave are obtained by great amounts of numerical calculation and analysis on working conditions. Research results in this work provide significant theoretical evidence to the oil exploration in Tahe Oilfield’s fracture-cavity reservoir.