International Finance: Analysis of Stock Prices and Currency Movements

This report provides an analysis of stock prices and currency movements of Commonwealth Bank of Australia, BHP Billiton Limited, Spark New Zealand Limited, and Auckland International Airport Limited. It also includes a comparison of ASX Index and CBA, NZ50 Index and SPK, and ASX Index and AIA. The report also discusses the correlation between SPK and AIA returns, and the influence of USD and NZD on the companies' operations.

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Authors Note:

INTERNATIONAL FINANCE
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Table of Contents
Answer to 1.a)............................................................................................................................2
Answer to 1.b)............................................................................................................................2
Answer to 2)...............................................................................................................................3
Answer to 3.a)............................................................................................................................4
Answer to 3.b)............................................................................................................................5
Answer to 3.c)............................................................................................................................5
Answer to 4.a)............................................................................................................................6
Answer to 4.b)............................................................................................................................7
Answer to 5.a)............................................................................................................................7
Answer to 5.b)............................................................................................................................7
References:.................................................................................................................................8

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Answer to 1.a)
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.300 3.483% CBA to testify in bank inquiry
BHP Billiton Limited 31.560 -2.472% BHP facing problems from China
Spark New Zealand Limited 3.840 -2.538% Unlimited Mobile plan improved
Auckland International Airport Limited 6.650 -1.917% Appointed boad member
Portfolio Average -0.861%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.230 -0.098% CBA feeling embarced by wrongdoing
BHP Billiton Limited 30.690 -2.757% China iron ore imports declines
Spark New Zealand Limited 3.960 3.125% Emirates Team to use Spark's 5G Network
Auckland International Airport Limited 6.680 0.451% Performance improvement
Portfolio Average 0.180%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 70.370 -1.207% Influenced by the market
BHP Billiton Limited 31.180 1.597% Buying sphere from BHP Insiders
Spark New Zealand Limited 4.010 1.263% Spark adds more COW’s to its herd
Auckland International Airport Limited 6.890 3.144% Tahitian Dreamliner being welcomed
Portfolio Average 1.199%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.810 -2.217% Influenced by the market
BHP Billiton Limited 32.400 3.913% High dividends announced
Spark New Zealand Limited 4.010 0.000% Southern Cross Cables NEXT Project
Auckland International Airport Limited 6.660 -3.338% Fire incident occurred
Portfolio Average -0.411%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.480 -0.480% Worst quarter from Australia housing
BHP Billiton Limited 33.360 2.963% Analyst reports shares to hit $40
Spark New Zealand Limited 3.970 -0.998% Spark paves the way to smart street
Auckland International Airport Limited 6.770 1.652% Analyst report on return on equity
Portfolio Average 0.784% Influenced by the market
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.910 5.009% News airticle from Analyst
BHP Billiton Limited 33.950 1.769% Buy rating made by Goldman
Spark New Zealand Limited 4.010 1.008% Influenced by the market
Auckland International Airport Limited 6.800 0.443% Influenced by the market
Portfolio Average 2.057%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.890 -0.028% Influenced by the market
BHP Billiton Limited 33.380 -1.679% Decline in iron ore prices is expected
Spark New Zealand Limited 3.960 -1.247% Influenced by the market
Auckland International Airport Limited 6.920 1.765% Influenced by the market
Portfolio Average -0.297%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.660 -0.320% Warren Buffet to buy CBA
BHP Billiton Limited 32.790 -1.768% Ex-dividend for $1.43 per share
Spark New Zealand Limited 3.940 -0.505% Influenced by the market
Auckland International Airport Limited 6.840 -1.156% Influenced by the market
Portfolio Average -0.937%
Week 3 07-12-2018
Week 4 14-12-2018
Week 8 11-01-2019
Week 5 21-12-2018
Week 6 28-12-2018
Week 7 04-01-2019
Week 1 23-11-2018
Week 2 30-11-2018
Answer to 1.b)
Stock Buying Price Selling Price Return
Commonwealth Bank of Australia 68.9 71.7 4.01%
BHP Billiton Limited 32.4 32.8 1.33%
Spark New Zealand Limited 3.9 3.9 0.00%
Auckland International Airport Limited 6.8 6.8 0.88%
Returns from the portfolio 1.55%

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The above table represents the overall returns that are generated from the portfolio
over the period of 8-weeks. Commonwealth Bank of Australia generated the major returns
during the investment period, while Spark New Zealand Limited provided no returns.
Answer to 2)
Figure 1: Comparing ASX Index and CBA
(Source: Au.finance.yahoo.com 2019)
The share price of CBA has moved according to the ASX index, where it can be
assumed that the Australian market influences the valuation of the organisation.
Figure 2: Comparing ASX Index and BHP
(Source: Au.finance.yahoo.com 2019)

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The above figure indicates that the share price movement of BHP is not at par with
the ASX market, where it is understood that share price of the organisation is not inclined to
the market.
Answer to 3.a)
Figure 3: Comparing NZ50 Index and SPK
(Source: Au.finance.yahoo.com 2019)
The valuation of SPK is directly influenced by the NZ50, as the share price is
increased and decreased, as per the market movement.
Figure 4: Comparing NZ50 Index and AIA
(Source: Au.finance.yahoo.com 2019)

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The price movement of AIA is also considered to be influenced by the NZ50, as the
stock returns are portraying the same pattern as the market.
Answer to 3.b)
Figure 5: SPK and AIA correlation
(Source: Au.finance.yahoo.com 2019)
The evaluation indicates low correlation between SPK and AIA returns, as seen in the
above figure. The low correlation is viable as in some instances the organisation provides
similar returns, while in another it provided opposite returns.
Answer to 3.c)
Figure 6: Comparing ASX Index and SPK
(Source: Au.finance.yahoo.com 2019)

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There is no return correlation between the SPK and the ASX index, which indicates
that the Australian market does not influence the organisation’s share price return.
Figure 7: Comparing ASX Index and AIA
(Source: Au.finance.yahoo.com 2019)
The stock price movement of AIA also indicates that it is not being influenced by the
Australian index, which is why the return patter is highly non-correlated.
Answer to 4.a)
Figure 8: Comparing USD with AUD
(Source: Oanda.com 2019)

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The returns of CBA is not inclined to volatility of USD/AUD, as maximum of the
company’s operations are conducted in AUD, while some of its operations in the
international market uses USD.
Answer to 4.b)
The revenues and expenses of BHP are directly related to USD, as maximum of its
operations are conducted in the international market. This is the main reason, why the
currency market directly influences its share returns
Answer to 5.a)
Figure 9: Comparing New Zealand dollar with AUD
(Source: Oanda.com 2019)
The price action of SPK is directly influenced by the NZD, as the operations of the
company are conducted in NZD. This is the main reason, why any alternations in the NZD
are directly reflected on its share price.
Answer to 5.b)
AIA operations are also conducted in NZD, which is the main reason why the patterns
of returns are directly linked with the volatility between NZD/AUD.

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References:
Au.finance.yahoo.com. 2019. Yahoo is now a part of Oath. [online] Available at:
https://au.finance.yahoo.com/world-indices [Accessed 15 Jan. 2019].
Oanda.com. 2019. Historical Currency Converter | OANDA. [online] Available at:
https://www.oanda.com/fx-for-business/historical-rates?
view=graph&base=USD&quote=EUR&duration=30 [Accessed 15 Jan. 2019].