Macroeconomic Variables and Equity Market Relationship

Macroeconomic Variables and Equity Market Relationship Introduction The equity market also known as stock market is the market for buyers and sellers to trade their equity instruments. There are a few types of equity securities, the most common form of equity securities are preferred stock and common stock. Equity market is important for a company because it allows a company to acquire funds without incurring debts. However, not all the companies are allowed to issue shares, only public listed company which is a limited liability company are allowed to issue share for the sale to the public. The buyers of the stock also became an ownership of a corporation and common stock holders have the right to vote on issues important to the corporation. Company pays their stock holders dividend annually base on the profit of the years. There are two main branches for investor to trade the corporate stock, which are organized exchange and over-the-counter (OTC). Organized exchange trading is governed by regulations and formal procedures to ensure the soundness o f the market. However, stocks that traded through over-the-counter is more informal and uses electronic to trade. From the past, statistics has shown that stock prices can be determined by the economic factors. Literature Review The objective of the authors to carry out the research is to examine the relationship between macroeconomic variables with equity market. The research can helps stakeholder to understand more about equity market and the impact of macroeconomic variables toward equity market. Kim, McKenzie, and Faff (2003) had investigated the impact of scheduled announcements made by government for macroeconomic variables toward the risk and return of three major US financial markets which include equity market. Ioannidis and Kontonikas (2007) had investigates the impact of monetary policy on equity market performance in 13 OECD countries. Abugri (2006) had investigated the relationship between macroeconomic variables with equity market performance. Hooker (2004) had investigated the macroeconomic variables to predict the equity market performance using the Bayesian model developed in Cremers (2002). Patel (2012) had carry out the research in on Indian Stock Market for the effect of macroeconomic det erminants on the performance of market. Trivedi and Behera (2012) and Prof. Sangmi and Hassan (2013) also had carry out research on Indian Stock Market for the relationship between equity prices and macroeconomic variables. Abdelbaki (2013) had used Autoregressive Distributed Lag Model to examine the relationship between macroeconomic variables and Bahraini equity market. Verma and Ozuna (2004) had carried out an empirical investigation for the outcome of Latin American stock markets influence by the macroeconomic variables. Maysami, Howe and Hamzah (2004) had examined the cointegration between macroeconomic variables and stock market’s sector indices rather than the composite index. Most of the journals had chosen interest rate and money supply as one of the macroeconomic variable which will affect the equity market. Nevertheless, foreign exchange rate, inflation rate, industrial production, gross domestic product, foreign direct investment, unemployment rate, gold price and stock market index also popular macroeconomic variables used to carry out the researches. Besides that, few authors also used some unpopular variables such as balance of trade, consumer price index, producer price index, volatility in foreign market and retail sales growth to do their researches. The following table shows the macroeconomic variables used by the authors to carry out their researches. The reason that the authors conduct the research is to provide empirical evidence and also extend the research area that previous researchers voided. The reason that Kim, McKenzie and Faff (2004) do this research is because literature only investigate about the news announcement without investigate about the impact of important macroeconomic variables announcement and the actual news announcement that different from the participant’s expectation that reflect the stock price. Ioannidis, Kontonikas (2008) expand the literature of the significant of monetary policy and stock price by including dividend payment of stock return of 13 OECD countries. Abugri (2008) examine whether the macroeconomic indicator could significantly explain the stock market returns of Latin American. Verma and Ozuna (2005) investigate whether macroeconomic movement significantly impacts the equity market of other Latin American countries. Hooker (2004) extends the research by including macroeconomic varia bles to examine the expected emerging equity market return. Patel (2012), Trivedi and Behera (2012) investigate the existing literature by including eight more macroeconomic variables to test the effect of macroeconomics as determinant on the performance of the Indian stock market. Sangmi and Hassan (2013) examine the effects of macroeconomic variables on Indian stock market in the Arbitrage pricing theory (APT). Abdelbaki (2013) carry out the research to find the significant relationship between macroeconomic variables and Bahraini stock market development (BSMD). Maysami, Lee, and Hamzah (2004) extend the research between macroeconomics variable and stock market’s sector indices instead of the composite index and examine relationships between selected macroeconomic variables and the Singapore’s stock market index (STI), and Singapore Exchange Sector indices. In order to determine the relationship of the macroeconomic variables and stock return, there was variety of test employed by different researchers for different purposes. First, Ioannidis and Kontonikas (2008) employed the Jarque-Bera test to test for the normality. They indicate that stock returns are non-normally distributed which leading the results of hypothesis testing invalid. By taking into account of the non-normality stock returns, bootstrap analysis was undertaken. The researchers also used the ordinary least squares method and the Newey-West heteroscedasticity consistent covariance matrix estimator method to examine the negative relationship between stock returns and interest rates. Moreover, Patel (2012), Trivedi and Behera (2012), and Maysami, Lee, and Hamzah (2004) found that the Johansens cointegration test (Johansen and Juselius, 1990) is more powerful in estimating the cointegrating vectors than Engle and Granger’s (1987). This is because cointegration can be tested in a full system of equations under one procedure, without requiring a specific variable to be normalized. This enables researchers to avoid carrying excessive errors from the first- into the second step. It also allows the avoidance of a priori of assumptions of endogenity or exogeniety. Moreover, the Johansen framework incorporates dynamic co-movements or simultaneous interactions, which enable researchers to study the channels through which of the macroeconomic variables affect the asset prices as well as their relative importance. Furthermore, Trivedi and Behera (2012), Patel (2012), and Verma and Ozuna (2005) identify that the Argumented Dickey-Fuller unit root test must carry out first to find the non-stationary of the variables before the Vector Error Correction which is used to investigate the long-run relationship and short-run dynamics among the variables. For the ADF test, reject the null hypothesis of non-stationarity for all the series. Then estimate the model i n log first difference if the given log first difference of all series is stationary which help to ensures that the series of data do not consist of unit roots problem and this could avoids the spurious relationships. In addition, Trivedi and Behera (2012) and Abugri (2008) estimates impulse response functions (IRFs) which are derived from the Vector Autoregressive Model (VAR). This estimates is used to measures the time profile of the effect of a shock on the behavior and investigate the dynamic relationship of equity prices with macroeconomic variables. Lutkenpohl (1991) states that depending on the ordering of the variables in the VAR model, the results from impulse response functions may have big different which may subject to the â€Å"orthogonality assumption†. Hence, Koop, Pesaran, and Potter (1996), and Pesaran and Shin (1998) combat the problem by employed â€Å"generalized† impulse response functions which are invariant to any reordering of the variables in t he VAR and also helps to any to ensure that the results are not subject to the orthogonality assumption. Last but not least, Hooker (2004) employed the Bayesian model selection approach. Due to the results could be sensitive to model specification problem, particularly when including additional variables in the regressions. Meanwhile, the theory provides little guidance as which macroeconomic variables should be included and excluded. This approach considers all achievable (linear) combinations of included explanatory variables, assigns them each flat priors of inclusion, and estimates their posterior probabilities. The purpose of the researchers is to examine the significant or insignificant relationship between macroeconomics variables and equity market. Kim, McKenzie and Faff (2003) found a significant relationship between equity market and price information of customer and producer. This can be evidenced by government announcements relating unexpected balance of trade news, bond market and financial market volatility which have great impact and important to the internal economy and subsequently influence equity return. Ioannidis and Kontonikas (2007) identify that the relationship between interest rate of monetary policy and expected equity return is significant. This had proved that the central bank can changed the interest rate to influence assessment of stock market. Moreover, Abugri (2006) found that the global variables which include interest rate, exchange rate, industrial production and money supply in four Latin American countries are significantly influence stock market’s ret urn. However, Hooker (2004) discovered that exchange rate do not provide significant results on equity market returns. Patel (2012) has identified commodity prices is one of the important variables that will significantly influence the stock market’s return. Hence, he suggested that the policymakers should try to maintain competitive price levels by implementing proper import duty and local taxes. Trivedi and Behera (2012) identify that there is a positive relationship between equity returns and macroeconomics variables which include index of industrial production, wholesale price index, foreihn institutional investment and capital international world index. Prof. Sangmi and Hassan (2013) have found that macroeconomics such as inflation, exchange rate, industrial production, money supply and interest rate, bring significant impact to the equity market where enhance in inflation would lead to higher stock price and tend to have higher rate of return. Abdelbaki (2013) found tha t the macroeconomics variables like income level, domestic investment, banking system development, private capital flows and stock market liquidity provide significant effects on a stock market functions, development and role in national economy. Verma and Ozuna (2004) found out that the use of cross-country Latin American macroeconomics variables is not significant in determining Latin American stock market movements. Maysami, Howe and Hamzah (2004) found out that the Singapore stock market formed significant relationship with all macroeconomic variables identified like money supply and interest rate, while the other Equity Index shows significant relationships on selected variables. Most of the journals are leading us to know that the macroeconomics variables and equity market have a significant relationship. Overall the researcher of Abugri (2006), Hooker (2004), Patel (2012), Trivedi and Behera (2012), Prof. Sangmi and Hassan (2013), Maysami, Howe and Hamzah (2004), found out th at macroeconomics variable such as interest rate and exchange rate is mostly the key of affecting the equity market. Recommendations Conclusion The results of the journals show us there is significant impact of macroeconomic variables toward the equity market. Hence, we recommend that there is a need for the government to initiate policies that will lower the interest rates as lower interest rate may boost up the equity market performance. There is a need for the government to control money supply since the results from the journals show that high money supply will lead to a better stock performance. Besides that, government also needs to control the exchange rate because there stock performance will go worse if the exchange rate is too high. Moreover, inflation rate may also a vital factor that will lower down the equity market performance if it is not control well. Hence, government is playing an important role and they should always analyze the equity market to boost up the country’s economy. In conclusion, macroeconomic variables significantly influence the stock price due to the implementation of macroeconomic variables affects the economic performance and companies’ stock price will be dropping during economic recession. Hence, movement of stock price can be predicted through the announcement or implementation of macroeconomic variables by the government.

A Review of American History

The Spanish-American war started with the declaration of war on April 25, 1898 by the United States on Spain following several incidents.These two incidents that prompted US President Mckinley to ask Congress for a declaration of war was the sinking of the American Battleship Maine in Havana harbor with 260 people and the interception of a private letter written by Spanish Minister Dupuy De Lome in Washington describing Mckinley as a â€Å"weak man and a bidder for the admiration of the crowd† (Brinkley, 320).This stirred and fan the American public’s uproar against the Spanish’ brutal occupation of Cuba and many Americans initially supported the war initiative.Meanwhile, during this time in history, a lot of global stirrings were already prompting the other superpowers to â€Å"slice the global cake† with vulnerable continents and countries like Africa and the weak Chinese Empire. The US government has had its taste of â€Å"conquering† so called d ependent people – the American Indians. This experience and the expansionist moves of the other superpowers started the US expansionism tendencies which were further stoked by the so called â€Å"yellow press† or sensationalist journalism.Meanwhile, huge American businesses have also been expanding overseas – beyond American boundaries in search of sources of raw materials, cheap labor and market for its own products.Thus, when the two incidents (Maine and Dupuy’s letter) occurred almost simultaneously, the opportunity to intervene in Cuban affairs presented itself with the overwhelming support of the American public and added pressure from the American business community who has huge investments in Cuba. Soon, the war against Spain reached not only the shores of Cuba but also Puerto Rico, the Philippine Islands, Guam, and other islands like Hawaii and Alaska.While the sensationalism of the news from Cuba stirred the American Public’s support, it w as in the same manner – through the news wire that American public learned about the brutal annexation of the Philippine islands and the subjugation of its rebellion for freedom initially fought against its Spanish rulers, then later on, with its new colonizers – the US government.No less than the famous American author Mark Twain objected to the colonization of the Philippines knowing that like the Cuban rebels, there was an organized Filipino rebellion against Spain prior to the intrusion of the US government into the Philippine islands.   Mark twain openly pointed out the enormous contradictions between the US claim of â€Å"benevolent† foreign policy and its brutal occupation of the islands.When US involvement became progressively more difficult to justify, and eventually came to be defended on the grounds that the U.S. could not retire from it without suffering â€Å"dishonor† according to then President McKinley, Twain advocated the position that â€Å"An inglorious peace is better than a dishonorable war† (Cushing, 1998).Meanwhile, the war in Cuba was referred to as â€Å"a splendid little war† by Secretary of State John Hay (Brinkley, 320). The war was over in as little as four months.   The actual battlefield casualties on the American’s side were 460 but about 5,200 died of diseases (Brinkley, 320). The joint forces of the Cuban rebels and the American Naval blockade already toppled whatever little resistance the Spanish forces mustered to put up.According to Brinkley’s chronology of events (321), the U.S. troops won four decisive battles within a week.   The war ended with the signing of the Treaty of Paris on December 10, 1898.   What begun as a war to help the Cubans free themselves from Spain’s brutal government ended up as the US government practically wrangling control over Spain’s former colonies – Cuba, the Philippine Islands and Puerto Rico in 1917.At this t ime, many Americans who first supported the efforts against Spain now swayed public opinion against the continuing US expansionism and brutal annexation of other countries.   The true colors and objectives of the US going to war â€Å"to help the Cuban rebels† swiftly shifted not long after the war was declared.

The Giver Essay Topics - a Brief Outline

The Giver Essay Topics - a Brief Outline These qualities are extremely important in someone. 5 Discuss the method by which the notion of release is employed in The Giver. Though the idea may be appealing to young readers, it doesn't bring in the exact same feelings from adult readers. There are a number of good and bad things in The Giver. 1 The ending of the giver was interpreted in a couple of unique ways. Feelings are among the absolute most essential things in life. God can be observed in the 3 battles mentioned. And this isn't the close of the story yet. The Birth of the Giver Essay Topics With FreeEssayHelp you'll find hundreds of Giver essay topics in a matter of many seconds. You must be proficient in the topic, have an overall idea about the chosen issue and figure out how to get the best arguments to demonstrate your thesis. As soon as you have completed this, you're all set to pick your topic and get started writing. To get started writing your assignment you would want to run into an interesting and promising topic. The Dirty Truth on the Giver Essay Topics This is because The Community is attempting to find sameness, by making everyone possess the exact same eye colour. The community also made a decision to eliminate choice in that shift. New Ideas Into the Giver Essay Topics Never Before Rev ealed Still, every one of them would show up in the overall list. Choice appears pretty easy. The Giver Essay Topics and the Giver Essay Topics - The Perfect Combination The pain lingered in him for the remaining portion of the day. If you're considering purchasing an item you will still have next calendar year, think about pulling out the card but you need to be careful. The old man said it would be painful soon and they would have an additional memory. After the procedure for release is finally revealed, we aren't surprised to find that it's lethal injection. Aside from the function of basketball, is the function of dogfighting throughout the novel. A complete world is simply possible if we've got imperfection as it allows us room to grow. He changes during the plan of the novel as a consequence of his experiences and actions. If it's so, then you might be having some challenging time for a student together with being a writer. On the flip side, Cuba and the Community and similar in the manner that in both places, a number of the citizens rights are taken away and they're not permitted to leave the land. The leaders think that removing the person's free will avoids the action of making wrong decisions. Among the powers these governments have above their citizens is the capacity to withhold information and block communication. The citizens aren't mindful of how inappropriate rule it's because they never judge and question just as on account of the sameness locally. the Giver Essay Topics Help! In the community It Is virtually not possible that people make choices. Without choices, citizens are passing up important life lessons that can assist you later on in life. The citizens learn at an extremely early age to accept what they're given. The constant attention of the puppies demonstrate that Esche is a really sensitive person that has the very best interest of others above the very best interest of her own self. All the other children backed away since they didn't understand what was going on. If you opt to have a third child (in the actual world), but decide it's too much work, you can set the baby up for adoption and know you ought to just have two children. Completely free Giver essay samples are offered on FreeEssayHelp with no payment or registration. Choice Is the action of picking or deciding between at least two possible ties. The Giver explained he was beginning to observe the color red. Jonas apprehensive feelings aren't only of the ceremony but that he is not going to have the ability to play with his friend Asher. While there may appear to be several reasons why a Utopian society is harmful, it's simple to see, especially close to the conclusion of the novel, that Jonas is prepared to create a sa crifice to finish the perfection. Jonas learns that his community, even though it may appear perfect at first, it's lacking lots of the critical things which make life special and worthwhile. Everyone In Jonas' community feels exactly the same way towards one another, which means they don't have any feelings.

New Negro Essay - 984 Words

The abolition of slavery in the United States presented southern African Americans with many new opportunities, including the option of relocation in search of better living conditions. The mass movement of black people from the rural areas of the South to the cities of the North, known as the Black Migration, came in the 1890s when black men and women left the south to settle in cities such as Philadelphia and New York, fleeing from the rise of Jim Crowe Laws and searching for work. This migration of blacks from the South has been an important factor in the formation of the Harlem Renaissance. The period referred to as the Harlem Renaissance, was a flourishing period of artistic and literary creation in African-American culture and†¦show more content†¦All of them shared a unified desire to shed the image of servitude and inferiority of the Old Negro and achieve a new image of pride and dignity for the revamped â€Å"New Negro†. Migration has been one of the defining characteristics of black life and art in the United States since the first forced relocation of African slaves to America. Some of the other major movements include the Atlantic slave trade, the extension of slavery to the Mississippi Valley (1820-1850), the emancipation and escape of slaves to freedom in the North, the movement of free people of color from the South to the North and Canada, and the immigration of small numbers of black Americans to Africa. During and after the Civil War the emancipated black men and women moved north to secure their freedom. At that same time many northern freed black men went south as soldiers, and other men and women traveled south to teach in communal institutions. The Exoduster movement (1877 to 1881), during which forty thousand to seventy thousand African-Americans left the former slave states for Kansas was the first movement out of the South. Blacks, in protest against the loss of political rights, wer e in search of equality and opportunity in the West. Then and later, the Talented Tenth: educated African-American leaders fled the riseShow MoreRelatedAlain Locke s The New Negro1400 Words   |  6 Pagesreferred as the â€Å"Old Negros† and the newer generation referred to as the â€Å"New Negros† took different outlooks on life. American Negros goal in life at this point in time was to change their mentality. But how? Locke had introduced many readers to the vibrant wondrous world of African Americans. He opened the eyes to what American Negros can do and not what they cannot do, no one should be restricted by any boundaries. One of his most influential writings was â€Å"Enter the New Negro†, its open the mindRead MoreEssay on Portraying the New Negro in Art1388 Words   |  6 Pages20th centuries Blacks in America were debating on the proper way to define and present the Negro to America. Leaders such as Alain Lock, W.E.B. Dubois, Marcus Garvey, and Tuskegee University founder Booker T. Washington all had ideas of a New Negros who was intellectually smart, politically astute, and contributors to society in trade work. All four influential leaders wrote essays to this point of the new Negro and their representations in art and life. In â€Å"Art or Propaganda†, Locke pleas not for corruptRead MoreThe New Negro, And Marcus Garvey s Speech On Negroes1387 Words   |  6 PagesAlain Locke wrote â€Å"Enter the New Negro,† and Marcus Garvey’s speech on Negroes in the early twentieth century interconnects on â€Å"new† Americans and new cultural Politics. Psychological and social traits were examined deeply about â€Å"new negroes,† and how their emergence in society was different from when their ancestors manifested. The â€Å"new† negro no longer embodied â€Å"old† characteristics that defined a black man. Society had always taught a black man how to act; however, now he was adapting to theRead MoreThe New Negro Of The Harlem Renaissance879 Words   |  4 PagesThe New Negro Movement, also known as The Harlem Renaissance, was a time in the early twentieth century where African Americans embraced literature, music, theatre, and visual arts (Alchin). They were inspired and gave inspiration to many blacks in the community. The Great Migration was the beginning of the Harlem Renaissance – it is, where it began the most significant movement in the black history. After World War I, â€Å"more than six million African Americans† traveled from â€Å"the rural South to theRead MoreThe New Negro Movement, By Zora Neale Hurston1720 Words   |  7 Pagessynonymous with creativity. It begun during the end of World War 1, in a relatively small section in New York City and ende d during the aftermath of The Great Depression. This was by far one of the most influential movements in African American culture. African Americans took pride in themselves and in their culture and wanted to showcase this through freedom of expression. Self-love in the â€Å"New Negro Movement† was monumental as it spread not only through Harlem, NY but also throughout the world. Read MoreThe New Negro, By Alain Locke1707 Words   |  7 PagesThroughout Alain Locke’s works â€Å"Values and Imperatives,† â€Å"Pluralism and Intellectual Democracy,† â€Å"Cultural Relativism and Ideological Peace,† â€Å"The New Negro,† and â€Å"Harlem,† I found there to be a number of reoccurring themes, such as absolutes, imperatives, values, and relativism and their place in pluralism. I am going to be focusing on all the aforementioned themes and showing how they are all intertwined into the principles of pluralism. What is an absolute? In â€Å"Values and Imperatives,† LockeRead MoreThe New Negro Summary Essay1412 Words   |  6 Pagesof Negro migration†. During this time in a movement known as the Great Migration, thousand of African Americans also known as Negros left their homes in the South and moved North toward the beach line of big cities in search of employment and a new beginning. They left the South because of racial violence such as the Ku Klux Klan and economic discrimination not able to obtain work. Their migration was an expression of their changing attitudes toward themselves as Locke said best From The New NegroRead MoreAnalysis of the New Negro Essay1605 Words   |  7 Pagesbeginning Alain Locke tells us about the â€Å"tide of negro migration.† During this time in a movement known as the Great Migration, thousands of African-Americans also known as Negros left their homes in the South and moved North toward the beach line of big cities in search of employment and a new beginning. As Locke stated, â€Å"the wash and rush of this human tide on the beach line of Northern city centers is to be explained primarily in terms of a new vision of opportunity, of social and economic freedomRead MoreAlain Lockes The New Negro: Aspects of Negro Culture Essay1832 Words   |  8 PagesAlain Locke, in The New Negro, suggests that the old Negro is really nothing more than a myth or an ideal. He talks about the fact that there are aspects of Negro culture - such as the spiritual - that were beaten down but were accepted when finally allowed to emerge. Locke then takes a look at some trends, including the tendency toward moving city-ward, and says these are not because of poor or even violent conditions in the south nor of the industry in t he north. Instead, he attributes thisRead MoreThe New Negro of Harlem Essay495 Words   |  2 Pagesblack community; also home to a highly diverse mix of cultures. This unprecedented outburst of creative activity exposed their unique culture and encouraged them to discover their heritage; thus becoming quot;the New Negro,quot; a term coined in 1925. First known as the quot;New Negro Movement,quot; it was later named the Harlem Renaissance. nbsp; nbsp; nbsp;This period of cultural development witnessed African American literature changing from initiative works to penetrating analysis of