PERFORMANCE OF SELECTED GLOBAL STOCK INDICES FOR THE MONTH OF SEPTEMBER 2016
Sudindra VR
1. INTRODUCTION
Last consecutive trading days’ global indices have shown negative trend, due to volatility in US and latest development of US tepid recovery news. Stock markets across the globe are trading at record high, NASDAQ and NYSE is up by 232% and 126% since the market bottomed in 2008-2009 crisis and with slow in recovery the record high trading is not sustainable. Several noted economists and distinguished investors are warning of stock market crash in 2016. The report of Harvard business school concludes the inability of US government to bolster US competitiveness worldwide. Many experts in India expecting the market to be volatile in the month of September 2016. The latest development of US tepid recovery news will impact the entire global stock market. The present study analysed the market performance through return and volatility of major global indices of G20 countries whether the expert’s opinion will hold good.
2. OBJECTIVES:
The objective of the study is to find out the impact of US tepid growth and decision regarding increasing policy rates to boost economy and the impact on it’s the global stock indices.
3. METHODOLOGY:
The study is empirical in nature; the study consists of analysing 19 major global stock exchanges of G20 nations. For the purpose of study primary data has been used. Primary data includes 19 global stock exchanges closing prices from 1st September 2016 to 14thSeptember 2016 sourced from www.quandle.com. Average return and standard deviation has been calculated to analyse the performance of global indices.
4. DATA ANALYSIS:
Table 4.1 Table showing average return and standard deviation of 19 selected major G20 countries stock exchanges for the period of 1st September 2016 to 14th September 2016
INDEX | AVERAGE RETURN | STANDARD DEVIATION |
NIFTY | -0.06 | 0.90 |
NIKKEI JAPAN | -0.21 | 0.71 |
S&P 500 US | -0.24 | 1.14 |
NASDAQ US | -0.12 | 1.19 |
SHANGAI COMPOSITE CHINA | -0.22 | 0.73 |
HANGSENG INDEXCHINA | 0.00 | 1.44 |
DAX GERMANY | -0.17 | 0.84 |
CAC FRANCE | -0.18 | 1.09 |
BOVESPA BRAZIL | -0.29 | 1.97 |
RTSI INDEX RUSSIA | 0.30 | 1.49 |
S&P TSX COMPOSITE INDEX (CANADA) | -0.25 | 0.90 |
ALL ORDINANCE INDEX AUSTRALIA | -0.38 | 0.92 |
IBEX 35 SPAIN | -0.08 | 1.25 |
IPC INDEX (MEXICO) | -0.43 | 0.85 |
KOSPI COMPOSITE INDEX (SOUTH KOREA | -0.1 9 | 1.01 |
JKSE: JAKARTA COMPOSITE INDEX (INDONESIA) | -0.40 | 0.80 |
RUSSEL 1000 US | -0.24 | 1.16 |
SENSEX INDIA | -0.02 | 0.86 |
MERVAL INDEX (ARGENTINA) | -0.15 | 1.83 |
Sources: Authors calculation
Graph 4.1 Graph showing average return of 19 selected major G20 countries stock exchanges for the period of 1st September 2016 to 14thSeptember 2016
Sources: Authors calculation
Inference: based on above graph it can observe that major stock exchanges in the month of September 2016 average declined by 0.18% in last 14 days. Brazil, Indonesia, Australia and Mexican indices reduce more than 0.3%, except Russian market which increased by 0.3%.
Graph 4.2 Graph showing standard deviation of 19 selected major G20 countries stock exchanges for the period of 1st September 2016 to 14thSeptember 2016
Sources: Authors calculation
Inference: based on above graph it can observe that the global market is highly volatile with average standard deviation of 1.1%. Argentina, Russia and Brazil markets have shown significantly high volatile among 19 indices and all the stock exchanges shows above 0.7 standard deviation in last 14 days of September month.
5. CONCLUSION:
Several noted economists, distinguished international investors and Indian market experts are warning on global stock market in September 2016 which may show negative trend. Harvard business school report concludes the inability of US government to boost economy impacting on global stock market indices with low average return and high volatility. Is this volatility and negative trend is going to continue for remaining days of September?
6. BIBLIOGRAPHY:
Ø Warren Buffett Predicting Upcoming Stock Market Crash? By John Whitefoot, BA Published : September 13, 2016, http://www.profitconfidential.com
Ø 80% Stock Market Crash To Strike in 2016, Economist Warns, BY JL YASTINE, September 9, 2016, http://thesovereigninvestor.com
Ø Report: US government inaction is hampering economic growth,By Josh Boak | AP September 15 at 12:17 AM, www.washingtonpost.com