International Finance Project: Stock Portfolio Performance Analysis

This international finance project involves creating and analyzing a stock portfolio consisting of Australian multinational corporations (Commonwealth Bank of Australia and Woolworths Group Limited) and foreign stocks traded on the Australian Securities Exchange (Genesis Energy Limited and Air New Zealand Limited). The analysis covers an eight-week period, examining weekly percentage changes and news events affecting stock prices. The portfolio's overall return is calculated, and individual stock performances are compared. The project also explores the correlation between stock price movements and market indices (Australian and New Zealand), as well as the impact of currency fluctuations (USD/AUD and NZD/AUD) on stock valuations. The findings indicate that local market indices significantly influence stock prices, while currency fluctuations have a more pronounced effect on companies with substantial international operations. The report concludes by highlighting the key drivers of stock valuations within the portfolio.

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

INTERNATIONAL FINANCE
1
Table of Contents
Answer to question 1.a)..............................................................................................................2
Answer to question 1.b).............................................................................................................3
Answer to question 2)................................................................................................................3
Answer to question 3.a)..............................................................................................................4
Answer to question 3.b).............................................................................................................6
Answer to question 3.c)..............................................................................................................6
Answer to question 4.a)..............................................................................................................8
Answer to question 4.b).............................................................................................................8
Answer to question 5.a)..............................................................................................................8
Answer to question 5.b).............................................................................................................9
References:...............................................................................................................................10
Appendices:..............................................................................................................................11

INTERNATIONAL FINANCE
2
Answer to question 1.a)
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.300 3.483% Bank inquiry being testified
Woolworths Group Limited 29.240 1.669% AGM meeting announcement
Genesis Energy Limited 2.320 -2.521% Presentation provided to shareholders
Air New Zealand Limited 2.850 1.786% Reduction in oil price
Portfolio Average 1.104%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.230 -0.098% Embarced by wrongdoing of the workers
Woolworths Group Limited 28.920 -1.094% Market condition on effect
Genesis Energy Limited 2.360 1.724% Ongoing disclosures by the organisation
Air New Zealand Limited 2.910 2.105% Reduction in oil price
Portfolio Average 0.659%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 70.370 -1.207% Market movement
Woolworths Group Limited 29.230 1.072% Analyst disclosure regarding earnings report
Genesis Energy Limited 2.400 1.695% Notice for disclosures
Air New Zealand Limited 2.880 -1.031% Fundamental report
Portfolio Average 0.132%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.810 -2.217% Market movement
Woolworths Group Limited 28.310 -3.147% Customer to boycott the organisation
Genesis Energy Limited 2.450 2.083% Notice for disclosures
Air New Zealand Limited 2.830 -1.736% Low earning growth
Portfolio Average -1.254%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 68.480 -0.480% Australia housing worst quarter
Woolworths Group Limited 28.670 1.272% Marketing strategy adopted
Genesis Energy Limited 2.440 -0.408% Disclosure Notices (D&O Ongoing)
Air New Zealand Limited 3.010 6.360% Reduction in oil price
Portfolio Average 1.686%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.910 5.009% News airticle from Analyst
Woolworths Group Limited 29.550 3.069% Woolworth's finanical strength reported
Genesis Energy Limited 2.500 2.459% Market movement
Air New Zealand Limited 3.000 -0.332% Market movement
Portfolio Average 2.551%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.890 -0.028% Market movement
Woolworths Group Limited 29.300 -0.846% Faulty chicken scandal
Genesis Energy Limited 2.440 -2.400% Market movement
Air New Zealand Limited 2.870 -4.333% Market movement
Portfolio Average -1.902%
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.660 -0.320% Warren Buffet to buy CBA
Woolworths Group Limited 29.640 1.160% Rising customer demand
Genesis Energy Limited 2.450 0.410% FY19 interim report disclosed
Air New Zealand Limited 2.990 4.181% Reduction in oil price
Portfolio Average 1.358%
Week 1 23-11-2018
Week 2 30-11-2018
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
The calculation conducted in the above figure table highlights the return that is
generated by the created portfolio on each week. The news of each stock is also analysed for
identifying the change in their return during the investment period. The alteration in the price
action of the selected stock has altered the relevant returns from investment.

INTERNATIONAL FINANCE
3
Answer to question 1.b)
Name of the Company 16 November 2018
11 January
2019 Return
Commonwealth Bank of Australia 68.90 71.66 4.01%
Woolworths Group Limited 28.76 29.64 3.06%
Genesis Energy Limited 2.38 2.45 2.94%
Air New Zealand Limited 2.80 2.99 6.79%
Returns from the portfolio 4.20%
The calculations in the above table indicate that the portfolio provides a return of
4.20% during the investment phase of 8 weeks. From the calculation, it can be detected that
Air New Zealand Limited provided the maximum returns during the 8-week investment. On
the other hand, Genesis Energy Limited provided the lowest return of 2.94% in 8-weeks.
Answer to question 2)
Figure 1: Index and CBA
(Source: Au.finance.yahoo.com 2019)
The return generation pattern of Commonwealth Bank Australia portrays similarity to
the Australian index, as witnessed in the above figure. There is full similarity between the
returns, which directly states that the Australian Index influences the organisations price
action.

INTERNATIONAL FINANCE
4
Figure 2: Index and WOW
(Source: Au.finance.yahoo.com 2019)
The similar price pattern is seen between the Australian index and Woolworths, which
indicates that the market influences the price movement. However, from 14th December to
20th December the price action of the organisation reflected alternative results, which is
conducted due to the news affecting its valuation. After the stipulated time, the price action of
the organisation returned to normal, where it started to be affected by the Australian market.
Answer to question 3.a)
Figure 3: New Zealand Index and GNE

INTERNATIONAL FINANCE
5
(Source: Au.finance.yahoo.com 2019)
The share price movement of Genesis Limited is directly affected by the New Zealand
market, as seen in the above figure. The share price return is directly reflecting the return of
New Zealand Index, which directly indicate that the Index influences the company value.
Figure 4: New Zealand Index and AIZ
(Source: Au.finance.yahoo.com 2019)
The New Zealand market also influences the share price of AIZ, as the organisation is
situated in the region. Hence, it could be understood that the price movement of the company
is affected by the NZ market.

INTERNATIONAL FINANCE
6
Answer to question 3.b)
Figure 5: GNE and AIZ
(Source: Au.finance.yahoo.com 2019)
There is high correlation between GNE and AIZ, as both the companies are situated in
New Zealand, where the price action in influenced by the NZ Index. The figure confirms the
high correlation between the companies, which depicts their price action movement.
Therefore, investors can use both the companies in their portfolio to increase the return from
investment.
Answer to question 3.c)
Figure 6: Index and GNE

INTERNATIONAL FINANCE
7
(Source: Au.finance.yahoo.com 2019)
The share price movement of GNE is not similar to the Australian market, as it does
not operate in the Australia. The contradictory returns can be witnessed in the above figure,
which states the negative correlation between the index and the company.
Figure 7: Index and AIZ
(Source: Au.finance.yahoo.com 2019)
The share price movement of AIZ and Australian Index has both similarity and
contradictory nature, which indicates that the correlation is positive but minimal. Therefore, it
could be assumed that partial price movement of the organisation is similar to the Australian
index.

INTERNATIONAL FINANCE
8
Answer to question 4.a)
Figure 8: USD vs AUD
(Source: Oanda.com 2019)
The share price movement of Woolworths is not affected by the fluctuations in the
USD/AUD currency, as major of its operations are conducted in Australia. The international
exposure of Woolworths is minimal, which is the main reason why the fluctuations in the
currency market are not influencing its share price movement.
Answer to question 4.b)
In this similar instance, there are low operations of Commonwealth Bank of Australia
in the international market, which is the main reason why the fluctuations in the currency
market are not influencing its share price value.
Answer to question 5.a)

INTERNATIONAL FINANCE
9
Figure 9: New Zealand dollar vs AUD
(Source: Oanda.com 2019)
The operations of AIZ are conducted in New Zealand, where the revenue is generated
in NZD. Hence, alternations in the valuation of NZD/AUD will directly have positive impact
on its valuation in the Australian market.
Answer to question 5.b)
GNE has major operations in New Zealand, where the alternations in the NZD/AUD
are having positive impact in its valuation. Hence, it could be assumed that the currency
market influences the share price value of GNE.

INTERNATIONAL FINANCE
10
References:
Au.finance.yahoo.com. 2019. Yahoo is now a part of Oath. [online] Available at:
https://au.finance.yahoo.com/world-indices [Accessed 19 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 19 Jan. 2019].

INTERNATIONAL FINANCE
11
Appendices:
Australia Based MNC
Name of the Company Symbol Country Price (16
Commonwealth Bank of Australia CBA Australia
Woolworths Group Limited WOW Australia
Foreign stocks (ADRs)
Name of the Company Symbol Country Price (16
Genesis Energy Limited GNE New Zealand
Air New Zealand Limited AIZ New Zealand
Name of the Company ### ### Return
Commonwealth Bank of Australia 68.90 71.66
Woolworths Group Limited 28.76 29.64
Genesis Energy Limited 2.38 2.45
Air New Zealand Limited 2.80 2.99
Returns from the portfolio
Week 1
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.300 3.483% Bank inq
Woolworths Group Limited 29.240 1.669% AGM me
Genesis Energy Limited 2.320 -2.521% Presentat
Air New Zealand Limited 2.850 1.786% Reductio
Portfolio Average 1.104%
Week 2
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 71.230 -0.098% Embarced
Woolworths Group Limited 28.920 -1.094% Market co
Genesis Energy Limited 2.360 1.724% Ongoing
Air New Zealand Limited 2.910 2.105% Reductio
Portfolio Average 0.659%
Week 3
Name of the Company Closing Price (Weekly) Percentage Change News
Commonwealth Bank of Australia 70.370 -1.207% Market m