Share Market Collapse - Australian and Chinese Economic Activity - Case Study Example

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Share Market Collapse - Australian and Chinese Economic Activity

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Subject: Macro & Microeconomics
Type: Case Study
Level: Masters
Pages: 3 (750 words)
Downloads: 0

Extract of sample "Share Market Collapse - Australian and Chinese Economic Activity"

Generally, the paper "Share Market Collapse - Australian and Chinese Economic Activity " is a good example of a micro and macroeconomic case study. Indexes are created to keep track of the performance of certain stocks over a period of time-based on the indicators one is interested in (Fortune, 1998). Share price indexes are constructed by comparing the share performance of one stock market during a particular period against the performance of the same market in other periods. Below are the comparisons of the share price patterns of Australia against major stock markets of the world as well as the annual percentage changes in the share prices for each quarter.

(i) Australia vs. the USA

An increasing trend in the share price can be noted in both the US and AU markets. US Market experienced rapid growth starting in 1997 but has declined in 2000. Both U.S. and AU market declined in 2008.

US stock market is fairly stable on its annual % change with the lowest changes coincide with the Stock Market Crash (1987), the 9/11 terrorist attack (2001), and during the current economic slowdown. The record-high annual % change in 1999 is brought about by the increasing number of smaller companies raising equity capital on the Australian Stock Exchange, increasing investor confidence (ABS, 2008).

(ii) Australia vs. Japan

Australia’s share price index is considerably higher than Japan’s over the span of more than 30 years. There are no notable fluctuations in the Japanese stock market over the 30 year period which explains why the stock price performance has maintained its level.

The annual percentage fluctuation of Japan’s stock market is not as remarkable as Australia’s performance.

(iii) Australia vs. Korea

The market movement of Korea is very similar to the market movement of Australia as can be seen in the graphs of their share prices and the annual percentage change of their share prices. One possible explanation for this behavior of the Australian market relative to the Korean market is the stronger economic relationship between Korea and Australia (Kim, n.d.; 13).

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