FIN302 Financial Institutions and Markets : Assignment

Added on - 21 Jul 2020

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FIN302
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11.......................................................................................................................................................1(a)Calculation of percentage change in equity in different weeks..............................................1(b) Performance of portfolio relative to others portfolio.............................................................1(2) ASX and stock performance......................................................................................................2(3).....................................................................................................................................................3(a) Foreign companies stocks and index......................................................................................3(b) Correlation between foreign stocks........................................................................................4©Foreign stocks and Australian market......................................................................................44 Relationship between Australia based MNC currency exposure and stock prices.......................55 Relationship between Foreign company stocks and currency to which they are exposed...........5REFERENCES................................................................................................................................6APPENDIX......................................................................................................................................7Figure 1Stock exchange in Australian companies...........................................................................2Figure 2Indexes and companies stocks performance......................................................................3Figure 3Foreign companies stock performance...............................................................................4Figure 4Foreign companies and ASX performance........................................................................4
INTRODUCTION1(a)Calculation of percentage change in equity in different weeksAttached in appendix(b) Performance of portfolio relative to others portfolioPerformance was high relative to other students portfolio. This is assumed because totalstock return geenrated by market is 4% and portfolio generate return of 2%. It can be said thatportfolio give moderate performance relative to market and due to this reason it is assumed thaton average basis portfolio perform better then same of other students. Market forces are themajor factor behind increase and decrease in return generated by relevant firms stocks. This isbecause every week no company issue press release or no news comes in respect to its businessin the market (Hameed, Kang and Viswanathan, 2010). It can be observed that consistently therewas pressure in market and due to this reason market indies either generate low or negativereturn on investment. All these things have direct inpact on companies stocks and when marketrise or decline companies stocks value increase or decrease in the market. It can be seen thatWesfarmers in month of December decided to sale its mine which will lead to increase in itsrevenue. This lead to increase in firm shares but then news of decline production lead to erosionof share value in the market. Clatex energy in month of December declare that is going todecleare infrastructure that is New port terminal which positively affect firm and due to thisreason its price increase. However, news of opposition of ACCC lead to decline in share price by4%. In case of other two firms also less news comes in market during relevant time period anddue to this reason it is assumed that it is the market factor highly affect share price then companyfactor.1|P a g e
(2) ASX and stock performance12345678910111213141516171819202122232425262728293031323334353637383940414243-4%-3%-2%-1%0%1%2%3%4%5%Chart TitleWesfarmersCaltex energyASXFigure1Stock exchange in Australian companiesInterpretationIt can be seen from chart that ASX and Wesfarmers are moving almost in same directionand magnitude as well as intensity is different to some extent in case of market and mentionedcompany. Correlation value is 0.73 which is reflecting that index and mentioned company arehighly coorelated to each other and moving in same direction. In case of Caltex energy changeshappened at rapid pace and are not inline to ASX. Coorleation value in case of Caltex energy andASX is 0.22 which is low and it can be said that index and stocks both are less coorelated to eachother. Hence, it can be said that ASX and both companies stock movements are related to eachother.2|P a g e
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