International Finance Portfolio Performance Analysis Project

This project analyzes the performance of a student-created international finance portfolio consisting of Australian multinational corporations (Wesfarmers and Woolworths) and foreign stocks (Air New Zealand and Genesis Energy). The analysis covers an eight-week period, examining percentage changes in stock prices, portfolio returns, and the influence of market conditions and news events on stock valuations. The project investigates the relationship between the performance of the selected stocks and the Australian and New Zealand market indices. Furthermore, the report delves into the impact of currency exchange rates (USD/AUD and NZD/AUD) on the valuation of the companies, providing insights into the factors driving the stock price movements. The student also analyzed the correlation between the selected stocks to understand the diversification benefits and the risk-return trade-offs within the portfolio.

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

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Table of Contents
1.a) Percentage change in stock price of companies:.................................................................2
1.b) Analysing the performance of the portfolio:.......................................................................3
2) Analysing the performance of Wesfarmers and Woolworths with Australian market:.........4
3.a) Analysing the performance of AIZ and GNE with New Zealand Index:...........................5
3.b) Detecting correlation between AIZ and GNE:..................................................................6
3.c) Analysing whether AIZ and GNE performance is driven by the Australian market:.........7
4.a) Understanding the implication of USD/AUD on valuation of WES:.................................8
4.b) Understanding the implication of USD/AUD on valuation of WOW:...............................9
5.a) Understanding the implication of NZD/AUD on valuation AIZ:.......................................9
5.b) Understanding the implication of NZD/AUD on valuation GNE:...................................10
References:...............................................................................................................................11

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1.a) Percentage change in stock price of companies:
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.890 0.950% Analyst viewing shares progress
Woolworths Group Limited 29.240 1.669% Annual general meeting was held
Air New Zealand Limited 2.850 1.786% Reduction in oil prices
Genesis Energy Limited 2.320 -2.521% Presentation provided by Genesis
Portfolio Average 0.471%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.590 -0.941% Market conditions applied
Woolworths Group Limited 28.920 -1.094% Market conditions applied
Air New Zealand Limited 2.910 2.105% Reduction in oil prices
Genesis Energy Limited 2.360 1.724% Ongoing Disclosures
Portfolio Average 0.449%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.950 1.140% Analyst viewing shares progress
Woolworths Group Limited 29.230 1.072% Analyst regarding the earnings report
Air New Zealand Limited 2.880 -1.031% Fundamental report disclosure
Genesis Energy Limited 2.400 1.695% Ongoing Disclosures notice
Portfolio Average 0.719%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.280 -2.097% Market conditions applied
Woolworths Group Limited 28.310 -3.147% Woolworths boycott by customers
Air New Zealand Limited 2.830 -1.736% Slugish earnings growth
Genesis Energy Limited 2.450 2.083% Ongoing Disclosures notice
Portfolio Average -1.224%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.430 0.480% Rising performance than Coles
Woolworths Group Limited 28.670 1.272% New marketing strategy adopted
Air New Zealand Limited 3.010 6.360% Reduction in oil prices
Genesis Energy Limited 2.440 -0.408% D&O Ongoing Disclosure Notices - Multiple
Portfolio Average 1.926%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 32.530 3.500% Market conditions applied
Woolworths Group Limited 29.550 3.069% Analyst report on the finanical strength
Air New Zealand Limited 3.000 -0.332% Market conditions applied
Genesis Energy Limited 2.500 2.459% Market conditions applied
Portfolio Average 2.174%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 32.080 -1.383% Market conditions applied
Woolworths Group Limited 29.300 -0.846% Woolworths faulty chicken discovered
Air New Zealand Limited 2.870 -4.333% Market conditions applied
Genesis Energy Limited 2.440 -2.400% Market conditions applied
Portfolio Average -2.241%
Name of the Company Stock price at end of the week % Change News (Primary reason)
Wesfarmers Limited 31.950 -0.405% Analyst viewing shares progress
Woolworths Group Limited 29.640 1.160% Increasing demand from customers
Air New Zealand Limited 2.990 4.181% Reduction in oil prices
Genesis Energy Limited 2.450 0.410% FY19 Interim Result
Portfolio Average 1.337%
Week 1 23 November 2018
Week 2 30 November 2018
Week 3 07 December 2018
Week 4 14 December 2018
Week 8 11 January 2019
Week 5 21 December 2018
Week 6 28 December 2018
Week 7 04 January 2019

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The above figure indicates the overall returns that have been generated by the selected
stocks over the period of eight weeks. There is specific analysis provided regarding the price
actions of the stocks, as it is reviewed with relevant news. The portfolio average returns of
each week are also displayed in the above figure providing the insight on the return that was
generated from the investment. The created portfolio depicts the overall returns that can be
generated from an investment.
1.b) Analysing the performance of the portfolio:
Stock 16 November 2018 11 January 2019 Return
Wesfarmers Limited 31.590 31.950 1.140%
Woolworths Group
Limited
28.760 29.640 3.060%
Air New Zealand Limited 2.800 2.990 6.786%
Genesis Energy Limited 2.380 2.450 2.941%
Returns from the portfolio 3.482%
The analysis has detected that the share of Air New Zealand has provided the highest
return, while Wesfarmers Limited has produced the lowest returns. The returns from the
portfolio in eight week are detected in the above calculations, where the investment provided
returns of 3.482%. The performance of the portfolio is considered adequate, as the returns
have been normal during the period. Investors use adequate calculation to determine the
overall stock, which can increase their exposure in the capital market. The current exposure
in the portfolio has provided adequate return for an investment of 8 weeks.

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2) Analysing the performance of Wesfarmers and Woolworths with Australian market:
Figure 1: WES compared with ASX Index
(Source: Au.finance.yahoo.com, 2019)
The price movement of WES is in relevantly similar with the ASX index, as rising
values of the Australian market has relevantly inclined the share value of WES. During the
period of eight weeks, the share price of Wesfarmers has positively reacted to the capital
market, where the increment in values has been higher than the market. However, the trend of
both ASX and WES is mainly similar.
Figure 2: WOW compared with ASX Index

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(Source: Au.finance.yahoo.com, 2019)
From the evaluation, it is detected that the share price movement of Woolworths is
similar to the ASX market. During the period from Dec 17 to Dec 22 the share price of
Woolworths did not react to the market movements. However, after the specified period the
prices of the organisation are complementing the price actions of the ASX market.
3.a) Analysing the performance of AIZ and GNE with New Zealand Index:
Figure 3: AIZ compared with New Zealand Index
(Source: Au.finance.yahoo.com, 2019)
The market index of New Zealand has relevantly complemented that share price
movement of Air New Zealand, as seen in the above figure. The rising values of the index are
also pushing the values of AIZ to increase more than the actual increment in the market
value.

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Figure 4: GNE compared with New Zealand Index
(Source: Au.finance.yahoo.com, 2019)
The price action of Genesis Energy Limited is showing contradictory movement with
the New Zealand index, as seen in the above figure. The prices GNE continued to increase,
while the index faced consolidations stage. Therefore, the New Zealand Index does not
influence the share price movement of GNE.
3.b) Detecting correlation between AIZ and GNE:
Figure 5: Correlation between AIZ and GNE

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(Source: Au.finance.yahoo.com, 2019)
There is negative correlation seen between the share price movement of AIZ and
GNE, as witnessed in the above figure. This negative correlation can eventual help the
investors in diversifying the risk from portfolio and maximise the returns. The rising value of
AIZ declined the value of GNE, as detected from the above figure.
3.c) Analysing whether AIZ and GNE performance is driven by the Australian market:
Figure 6: AIZ compared with ASX Index
(Source: Au.finance.yahoo.com, 2019)
The price action of AIZ is complemented by the ASX index, where values of both
index and the company increased in the same time. Therefore, the Australian Market
influences the share price movement of AIZ, where increment in the index is raising the value
of AIZ.

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Figure 7: GNE compared with ASX Index
(Source: Au.finance.yahoo.com, 2019)
The contradictory price action of GNE and ASX index is mainly seen in the above
figure, where the organisation share price movement is not influenced by the Australian
index. The share price of GNE increases when the value of ASX index decline and vice-
versa.
4.a) Understanding the implication of USD/AUD on valuation of WES:
Figure 8: Currency exchange of USD with AUD

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(Source: Oanda.com, 2019)
Wesfarmers earns in USD in the international market, which is converted in AUD.
The share price of Wesfarmers is not influenced by the fluctuations in the currency market, as
maximum of the revenues comes in AUD. Therefore, the fluctuations in the USD/AUD are
not influencing the share price of Wesfarmers.
4.b) Understanding the implication of USD/AUD on valuation of WOW:
Woolworths accumulates revenues in USD, while conducting trade in the
international market. The share price value of the organisation in not influenced from the
currency market, as maximum of the revenues is generated in AUD. Hence, it can be detected
that share price of the organisation in not determined by the fluctuations in the currency
market. WOW and WES has low operations in the international market, which is the main
reason, why the share of the company are not influenced by the fluctuations in the currency
market.
5.a) Understanding the implication of NZD/AUD on valuation AIZ:
Figure 9: Currency exchange New Zealand dollar with AUD

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(Source: Oanda.com, 2019)
The revenues of New Zealand dollar is the main currency in which the AIZ
operations, where the fluctuation in the currency market is directly reflected in the share
value of the organisation. Hence, the decline in share value of NZD is directly reducing the
share price value of AIZ and vices versa.
5.b) Understanding the implication of NZD/AUD on valuation GNE:
The share price value of GNE is also influenced by the currency valuation of NZD, as
the increment and decline in the values is directly affecting their price movement. The
operations of the organisation is conducted in NZD currency, which is the mainly reason,
while the share price is influenced by the currency market.

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References:
Au.finance.yahoo.com. (2019). Au.finance.yahoo.com. Retrieved 11 January 2019, from
https://au.finance.yahoo.com/world-indices
Oanda.com. (2019). Oanda.com. Retrieved 11 January 2019, from
https://www.oanda.com/fx-for-business/historical-rates?
view=graph&base=USD&quote=EUR&duration=30