Analysis of Yum China Holdings Inc. Stock Price in Financial Markets

This report analyzes the stock price trends of Yum China Holdings Inc. within the context of financial markets. The analysis covers a four-month period, with a more detailed examination of the last three weeks, utilizing data from Yahoo Finance. The report graphically depicts the stock's price fluctuations and identifies key trends, including an initial price rise attributed to a calendar effect, followed by a decline due to global health concerns related to the Coronavirus, the US-China trade war, and a sluggish Chinese economy. It explores the impact of these factors, such as the temporary closure of Yum China restaurants and the uncertainty surrounding tariffs. The report provides recommendations, including expanding operations beyond China and diversifying partnerships. The conclusion highlights the influence of external factors on investor sentiment and the reflection of business performance in financial markets. References include sources from Yahoo Finance and Fort Worth Business Press.

FINANCIAL MARKETS

FINANCIAL MARKETS
 Place for trading of the shares of publically
listed securities.
 Trading conducted in the electronic form.
 Place for trade for the global investors.
 Benefit for the companies in terms of
gathering large capital and thus build an
investor base.
 Represents investor sentiments and effect of
political, economic, technological changes.

TYPES OF FINANCIAL MARKETS
 Share markets
 Commodity market
 Bond market
 Derivatives market

MAJOR SHARE MARKETS

YUM CHINA HOLDINGS INC.
 Founded in year 2016
 9200 restaurants in 1300 towns
and cities.
 Leading restaurant brands:
Pizza Hut, East Dawning, Taco
Bell, KFC and others.
 NYSE symbol: YUMC

ANALYSIS OF PRICE TRENDS
(Source: Yahoo Finance, 2020)
Red: Yum China Holdings Inc.
Bli Blue: NASDAQ

ANALYSIS OF PRICE TRENDS
 Increasing trend in November and December.
 The prices of security are specifically falling
after January.
 While the share prices of Yum China depict
higher fall and volatility, the NASDAQ
represents fluctuations in the global markets
too.

ANALYSIS OF PRICE TRENDS
 November – December depicts price rise in
shares of Yum China Holdings Inc.
 Key reason for initial price rise: Calendar
effect.
 Calendar effect: The celebrations of the
festivals in the country can significantly
influence the economic conditions and thus
the prices of the shares (Kumar and Jawa,
2017).

ANALYSIS OF PRICE TRENDS
Highest price in December end and Mid
January
Date Open High Low Close Adj Close Volume
07-10-2019 42.92 45.00 42.25 44.49 44.24 4035900
28-10-2019 44.45 44.90 41.23 41.44 41.21 15780700
04-11-2019 41.94 43.90 41.80 43.85 43.61 14820600
25-11-2019 42.47 44.75 42.40 44.52 44.27 9693700
02-12-2019 44.67 45.05 43.80 44.79 44.67 9008100
30-12-2019 48.73 49.15 47.81 48.42 48.29 6145400
06-01-2020 48.03 50.74 47.20 48.80 48.67 7320800
13-01-2020 48.90 50.60 48.13 49.85 49.71 9204600
03-02-2020 43.06 44.93 42.50 42.71 42.59 18267800
24-02-2020 43.83 45.29 42.26 43.79 43.67 22383500
09-03-2020 40.79 43.04 40.42 42.93 42.93 3331454

KEY REASONS FOR SHARE PRICE VOLATILITY
 Global health concerns originating from China
in the form of the Coronavirus (Ray, 2020).
 US China Trade War.
 Overall sluggish Chinese economy.

KEY REASONS FOR SHARE PRICE VOLATILITY
(Source: Fort Worth Business Press, 2020)

Analysis of the reasons: Global Health
Concerns
 As per estimates the global health
crisis posed by Coronavirus would
impact Chinese economy to the tune of
$ 280 billion.
 Industries most affected: Food, Travel,
Hospitality, Medicines and others.

Analysis of the reasons: Global Health
Concerns
 Restaurants of Yum China closed in
areas of Guangzhou, Shanghai, Macau,
Hong Kong and others.
 Temporary close of 30% branches.
 CFO words: sales expected to decline
significantly because of government
restrictions.

Analysis of the reasons: US CHINA Trade
War
 Uncertainty on tariffs leading to
economic slow down.
 Company being in China which is key
supply chain partner has not been
spared from the tariff war impacts on
imports and exports.

RECOMMENDATIONS
 Expand operations beyond the China
cities and provinces.
 Diversify in the partnerships and
products by partnering with organic
and healthy foods brands.

CONCLUSION
 Shares of Yum China have been
severely impacted by the external
factors as depicted by the price
trends.
 Financial markets are the reflection
of business performance and the
effect of the external factors on the
investor sentiments.

REFERENCES
 Kumar, H. and Jawa, R. (2017) Efficient market hypothesis
and calendar effects: Empirical evidences from the Indian
stock markets. Business Analyst, 37(2), pp. 145-160.
 Ray, H. (2020) Restaurant Industry's Traffic Woes Deepen
on Coronavirus Scare [online] Available from:
https://finance.yahoo.com/news/restaurant-industrys-
traffic-woes-deepen-130601667.html [Accessed on: 09
March 2020].
 Fort Worth Business Press (2020) Coronavirus weighs on
Yum Brands [online] Available from:
http://www.fortworthbusiness.com/news/coronavirus-
weighs-on-yum-brands/article_ba16e08a-49c5-11ea-a926-
bb0299da3130.html [Accessed on: 09 March 2020].