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Investigation of the factors that couse a co-movement among BRIC, the bigges 4 emerging market in the world - Thesis Proposal Example

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Investigation of the factors that cause a co-movement among BRIC, the biggest 4 emerging market in the world Table of Contents Abstract 3 Introduction 4 Overview of the emerging markets and BRIC 5 Overview of the stock market linkages and co-movements 9 Data and Methodology 10 Time Table 11 References 12 Bibliography 13 Abstract The present paper deals with the degree to which the stock market trends in the Big Four nations underlying BRIC had been behaving over the years…
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Investigation of the factors that couse a co-movement among BRIC, the bigges 4 emerging market in the world
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Download file to see previous pages Given their urgency in development and economic growth, all of them tend to possess similar demands owing to which their stock market indices correlate strongly. One of the most important factors which tend to affect all of them is fluctuations in oil prices since oil is the most important fossil fuel necessary for technological improvements. Other important factors which account for their stock market linkages are similarities in the political and cultural aspects of all four nations. The soaring popularity of these nations is reflected through betterment in their respective market sizes as well as economic growth rates. This trend is noted particularly due to improvements in the investment inflows within these nations over the past few years. One of the strongest points which have been elaborated in the present paper is the limited liberalisation that these nations have allowed to their peers. Unlike the advanced economies which had opted for complete liberalisation since a long time, these developing nations are yet to free their boundaries and this partial freedom is an essential reason why external economic crises could not touch the emerging nations as could be evinced from the recent subprime crisis. Introduction BRIC is a phrase that jointly represents the four emerging economies of Brazil, India, Russia and China respectively. The term was formulated in 2001 owing to a positive correlation in the macroeconomic trends of these four nations. In fact, when the Chief Economist of Goldman Sachs, Jim O’Neill proposed the name, he had cited the qualitative outcome of a prolonged research which established that these four nations will eventually emerge as global ‘powerhouses’ by 2050 (Kowitt, 2009, ‘For Mr. BRIC, nations meeting a milestone’). The connotations about the potentials of these nations had been recognised by 2008 when the bloc attained 15 percent of net global output in contrast to the expectations posed by Goldman Sachs. However, the nations did not attain a homogenous growth over time as predicted by the researchers; while Brazil and Russia went forth in a fast paced growth path, the road to development had not been as smooth for China and India. The stock market trends depicted 35% and 21% deterioration in terms of US Dollars for China and India respectively between 2007 and 2008. However, stock market index for Brazil had been up by 7% while that for Russia had been 6% which could be counted as fair compared to the two Asian nations (The Economist, 2008, ‘Another BRIC in the wall’). This trend had been continuing since 2008 as shows the diagram alongside even though they portray similar stock market trends. The stock market indices being considered are Ibovespa for Brazil, RTS for Russia, S&P CNX 500 for India, and the SSE Composite for China recorded between October, 1990 and October, 2009 (An & Brown, 2010, p. 17). A direct implication of the above diagram could be the presence of a robust association between the four emerging economies, which actually forms the background of the present paper. Purpose of the present paper will be to guide the investors willing to invest in BRIC nations. An examination of the linkages between stock market ...Download file to see next pages Read More
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