Australian Stock Market Analysis

This assignment analyzes the performance of several prominent Australian stocks, including Blue Scope Steel Limited, Aristocrat Leisure Limited, Air New Zealand, Air Xpanders, ASX, NZX, and NYSE. The analysis examines share price changes, percentage fluctuations, and correlations between different companies and market indices like NZD/AUD and USD/AUD.

INTERNATIONAL FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
(1).....................................................................................................................................................1
(a) Performance of portfolio........................................................................................................1
(b) Comparison of portfolio with same of other students............................................................1
(2) Australia companies stocks and index performance..................................................................1
(3).....................................................................................................................................................2
(a).................................................................................................................................................2
(b) Relationship between foreign stocks......................................................................................3
© Relationship between foreign stocks and Australia stock exchange.......................................4
(4).....................................................................................................................................................4
(a) Coorelation between exchange rate and stock performance..................................................4
(5).....................................................................................................................................................4
(a) Correlation between exchange rate and stock performance in case of foreign companies....4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
APPENDIX......................................................................................................................................7
Figure 1ASX and firms BlueScope and Aristocrat Lesiure performance.......................................1
Figure 2Air New Zealand performance and index..........................................................................2
Figure 3Air Xpander performance and index..................................................................................2
Figure 4Foreign companies stocks..................................................................................................3
Figure 5Relationship between Air New Zealand and Air Xpander as well as ASX.......................4

INTRODUCTION
Portfolio creation is the one of the most technique that is used for earning good amount of
profit on investment. In the current report, 4 companies are analyzed 2 of which are Australia
based and other one are USA and New Zealand based. Correlation method is used to identify
relationship between stocks and currencies and impace of latter one on former one is identified.
Apart from this, through charts stocks are analyzed. Apart from this, reasons that are responsible
for stock price movement are also identified. In this way, entire research work is carried out.
(1)
(a) Performance of portfolio
All calculations and details are given in appendix.
(b) Comparison of portfolio with same of other students
Portfolio performance is expected to be lower in comparison to other students because
overall return generated by portfolio is 0.78% which is quite low as expected in comparison to
portfolio of other students. Poor market performance is the one of the basic reason behind such a
low return that is generated by portfolio. Return generated by Australia, USA and New Zealand
market are 2%, -3% and 11% which are low and due to this reaosn stocks failed to generate good
reuturn for investor.
(2) Australia companies stocks and index performance
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
-8%
-6%
-4%
-2%
0%
2%
4%
6%
Chart Title
Blue Scope Steel limited Aristocrat Leisure Limited ASX
Figure 1ASX and firms BlueScope and Aristocrat Lesiure performance
1 | P a g e

Interpretation
Chart is reflecting that Blue scope and ASX are performing most of time in same
direction and there is difference between both of them in terms of return. However, chart is
indicating that Aristocrat and ASX performance are less in same direction. It can be seen that on
many occassions when ASX increase share price of Aristocrat Leisure decline. Thus, there is less
coorelation between Aristocrat Lesiure stock and index and vice verse for Blue Scope Steel
Limited.
(3)
(a)
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Chart Title
AirNewzealand NZX
Figure 2Air New Zealand performance and index
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Chart Title
AirXpanders NYSE
Figure 3Air Xpander performance and index
2 | P a g e

Interpretation
Chart related to Air New Zealand is reflecting that market and stock are coorelated to
each other as most of times both in similar direction and on this basis assumption of positive
relationship is formed. On other hand, in case of Air Xpander it can be observed that company
shares are moving highly up and down relative to market. Hence, there is low or negative
relationship between company shares and index. Thus, it can be said that in case of both stocks
different trends are observed.
(b) Relationship between foreign stocks
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Chart Title
AirNewzealand AirXpanders
Figure 4Foreign companies stocks
It can be seen from chart that there is negaitve correlation betweenn both companies stocks
because there is high fluctuation in stock of Air Xpander relative to same of Air New Zealand.
Apart from this, both companies stocks are inversely moving multiple times. Due to this reason it
is assumed that stocks of both firms are negatively correlated to each other.
3 | P a g e

© Relationship between foreign stocks and Australia stock exchange
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Chart Title
AirNewzealand AirXpanders ASX
Figure 5Relationship between Air New Zealand and Air Xpander as well as ASX
Interpretation
Both firms shares are negatively coorelated to the ASX as indicated by the chart where
high movement is not observed in ASX but in case of companies like Air New Zealand and Air
Xpander high deviation is not observed. Due to this reason negative relationship is observed
between ASX and both firms shares.
(4)
(a) Coorelation between exchange rate and stock performance
There are two Australian firms that are taken for analysis purpose which are Blue Scope
Steel Limited and Aristocrat Leisure Limited (Miyajima, Mohanty and Chan, 2015). It can be
observed that correlation value of Blue Scope Steel with NZD/AUD pair is 0.37 which reflect
that there is low coorelation between both variables and exchange rate does not highly affect
companies stock price. In case of Aristocrat Leisure Limited coorelation value is -0.27 which
reflect that there is negaitve relationship between currency and mentioned company stock
performance. It can be said that if USD value will increase then in that case price of stock of
Aristocrat Leisure Limited will decrease.
(5)
(a) Correlation between exchange rate and stock performance in case of foreign companies
In case of New Zealand company Air New Zealand it can be seen that coorelation value
is -0.39 which reflect that if currency value of NZ increase against AUD then in that case stock
price of ANZ declined in Australia or vice verse (Soukhoroukova, Spann and Skiera, 2012). On
4 | P a g e

other hand, in case of Air Xpander also coorelation value is negative which is -0.35 which again
reflect that in case USD become more stronger then AUD then in that case price of Air Xpander
decrease.
CONCLUSION
On basis of above discussion it is concluded that currency factor have moderate impact
on stock performance. Apart from this, index also have significent impact on share price. Thus,
one need to consider multiple factors while making investment decisions.
5 | P a g e

REFERENCES
Books and journals
Miyajima, K., Mohanty, M.S. and Chan, T., 2015. Emerging market local currency bonds:
diversification and stability. Emerging Markets Review. 22. pp.126-139.
Soukhoroukova, A., Spann, M. and Skiera, B., 2012. Sourcing, filtering, and evaluating new
product ideas: An empirical exploration of the performance of idea markets. Journal of
Product Innovation Management. 29(1). pp.100-112.
6 | P a g e

APPENDIX
Week 1
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 13.81 3%
Firm issue notification in respect to buy back of
shares
0.
25
Aristocra
t Leisure
Limited
22.95999
9 -1%
Profit booking was the main reason behind decline in
share price.
0.
25
AirNewz
ealand 3.195 2%
News that company is going to elevate its load factor
increased by 83% lead to sharp rise in share price.
0.
25
AirXpan
ders 0.695 -2% Pessimistic assumption lead to decline in stock price.
0.
25
Portfolio
average 0.68%
Week 2
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 13.84 0%
Again notice in respect to buy back was issued due
to profit booking intention share price declined in
week.
0.
25
Aristocra
t Leisure
21.99 -3% Negative sentiments formed about company among
investors and shares tanked by -3%.
0.
25
7 | P a g e

Limited
AirNewz
ealand 3.2 1%
Expectation of elevation in company operations
results in positive percentage growth.
0.
25
AirXpan
ders 0.69 0% Same as above.
0.
25
Portfolio
average -0.69%
Week 3
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 14.06 2.11%
News of buy back again comes in the market and
due to profit booking scenario shares were available
at cheaper rate. Hence, stock price get increased.
0.
25
Aristocra
t Leisure
Limited
22.70999
9 3%
Due to consistent profit booking shares were
available at cheaper price and due to this reason
sudden demand increase.
0.
25
AirNewz
ealand 3.225 2%
Anticipation about future growth remain consistently
in the market and results in 2% change.
0.
25
AirXpan
ders 0.69 -1%
Consistent decline in stock price create negative
sentiments among investors and share price reduced
by 1%.
0.
25
Portfolio
average 1.55%
Week 4
Name of
company
Stock
price at
Percentage
change in
Primary reason W
ei
8 | P a g e

end of
week stock price
gh
t
Blue
Scope
Steel
limited 14.01 -0.92%
Profit booking was the main reason behind decline in
share price.
0.
25
Aristocra
t Leisure
Limited 23.1 1.97%
New CFO appointed and lead to increase in share
price.
0.
25
AirNewz
ealand 3.27 0.93%
In some of airplanes problem was observed in engine
which affects share price.
0.
25
AirXpan
ders 0.685 -1.01% Same as above
0.
25
Portfolio
average 0.24%
Week 5
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 15.09 8%
Firm declare in notification that USA tax reforms
will benefit its earnings.
0.
25
Aristocra
t Leisure
Limited 24.15 2%
On news of appointment of new director share price
increase.
0.
25
AirNewz
ealand 3.165 -4%
Negative perception remain continue about the
business firm.
0.
25
AirXpan 0.685 0.00% Pessimistic thought about firm remain continue. 0.
9 | P a g e

ders 25
Portfolio
average 1.55%
Week 6
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 15.37 1% Firm issue notice in respect ceasing of shareholding.
0.
25
Aristocra
t Leisure
Limited 23.93 -1% Profit booking lead to decline in share price.
0.
25
AirNewz
ealand 3.18 0% Same as above.
0.
25
AirXpan
ders 0.725 6%
Shares were declined by large percentage and
become cheaper which lead to price plunge by 6%.
0.
25
Portfolio
average 1.46%
Week 7
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
15.93 4% Strong market performance lead to increase in stock
price.
0.
25
10 | P a g e

limited
Aristocra
t Leisure
Limited
22.95999
9 -2% Profit booking remain continue.
0.
25
AirNewz
ealand 3.21 1%
Negative news in market further create fear among
investors. However, stock price increase by 1%.
0.
25
AirXpan
ders 0.7 -3%
Profit booking was main reason behind decline in
share price.
0.
25
Portfolio
average -0.33%
Week 8
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 15.82 0% Profit booking responsible for decline in share price.
0.
25
Aristocra
t Leisure
Limited 22.6 -2% Acquisition of Big Fish completed.
0.
25
AirNewz
ealand 3.02 -4%
Index poor performance lead to reduction in share
price.
0.
25
AirXpan
ders 0.71 1%
Due to end of profit booking share price get elevate
by 1%.
0.
25
Portfolio
average -1.23%
Week 9
11 | P a g e

Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited 15.55 0% Same as above.
0.
25
Aristocra
t Leisure
Limited 22.66 4%
Strong market performance lead to increase in stock
price.
0.
25
AirNewz
ealand 3.03 1% Same as above.
0.
25
AirXpan
ders 0.76 9%
Shares were declined by large percentage and
become cheaper which lead to price plunge by 6%.
0.
25
Portfolio
average 3.37%
Week 10
Name of
company
Stock
price at
end of
week
Percentage
change in
stock price Primary reason
W
ei
gh
t
Blue
Scope
Steel
limited
0.103731
343 -2% Profit booking remain consistent in the market.
0.
25
Aristocra
t Leisure
Limited
24.13999
9 4%
Regulatory approval of CFO was given and this
news lead to increase in share price.
0.
25
AirNewz 2.99 0% Share price decline in line to market index. 0.
12 | P a g e

ealand 25
AirXpan
ders
-
0.071428
571 -14%
Due to profit booking shares tumbled by high
percentage
0.
25
Portfolio
average -2.98%
Blue
Scope
Steel
limited
Aristocrat
Leisure
Limited
AirNe
wzeal
and
AirX
pand
ers ASX NZX
NYS
E
NZD/
AUD
US
D/
AU
D
Blue Scope
Steel
limited 1
Aristocrat
Leisure
Limited
0.139708
959 1
AirNewzea
land
-
0.465481
737
-
0.1282962
28 1
AirXpande
rs
0.378782
551
-
0.1229669
36
-
0.461
65403
5 1
ASX
0.820855
666
0.2835118
59
-
0.134
34282
8
-
0.017
9797
98 1
NZX
0.171113
329
-
0.1909682
4
-
0.375
05917
4
0.313
1604
42
-
0.027
6040
4 1
NYSE
0.765970
336
0.2323081
3
-
0.750
78463
8
0.289
9823
87
0.559
8919
46
0.067
6511
02 1
NZD/AUD
0.379064
005
0.1257897
09
-
0.394
41985
2
0.395
7720
95
0.189
9685
31
0.017
5045
63
0.448
3832
47 1
USD/AUD -
0.778971
-
0.2701387
0.802
11796
-
0.356
-
0.540
-
0.213
-
0.945
-
0.363
1
13 | P a g e