What Does - BRIC Mean?
"The term 'BRIC' (BRAZIL, RUSSIA, INDIA, CHINA) was coined by Jim O'Neill [Goldman Sachs' London-based head of global economic research] at Goldman Sachs in November 2001," says Maria Gordon, speaking on a July 25 conference call. Gordon, based in London, is a portfolio manager for the new BRIC fund, and executive director and co-head of GSAM's global emerging markets equity. The other portfolio managers for the BRIC fund are: Singaporebased Kenny Tjan, executive director and co-head of GSAM's global emerging markets equity; Richard Flax executive director, global emerging markets equity, London; and Mark Syn, executive director, global emerging markets equity, Singapore. At the end of the nineties, the emerging markets attracted attention mainly through a series of crises. In 1994, Mexico was shaken by the so-called “Tequila crisis”, and in 1997-98, the booming Tiger countries in Asia were hit. Then in early 1999, Russia declared insolvency and in the same year Brazil just managed to escape the bankruptcy of the state. Finally, in 2001 the financial and currency systems in Argentina collapsed. In most cases, the economic crises were only of short duration. Today most of the former Tiger countries are no longer counted as developing countries. They have outgrown this state and are now viewed as industrialised countries. Much the same applies to Mexico. An aspect of importance for future developments is the fact that the crises concerned frequently triggered sweeping reforms, and not just in the countries directly affected! In recent years, BRIC countries have, for example, built up substantial foreignexchange reserves thanks to large trade surpluses. Russia and Brazil have improved their debt structures and China is in the process of significantly deregulating its currency and share trading systems. These factors are also reflected in higher credit ratings of rating agencies. Three of these four countries already have a prized investment grade rating.
Younger populations and new pools of consumers are helping drive interest in BRIC investing. According to GSAM, the pool of new consumers in BRIC countries with annual incomes of above $15,000 will, by 2025, be almost twice the total population of Japan, three times the total population of Germany, and four times the total population of the U.K., France, or Italy. The four countries form natural markets for each other: "China and India are key sources of demand for natural resources; Russia and Brazil are key sources of supply for natural resources," explains Gordon, adding that BRIC countries contributed one-third of global growth in past five yrs, according to Jim O'Neill. With valuations more modest since the emerging markets' sell off this year, Gordon asserts that Ex-India, (which at 19.9 times earnings still has relatively high P/E multiples), BRIC markets have more attractive fundamentals than the U.S., Europe, or Japan markets. She calls BRIC a "very profitable slice of the universe." Including India, the P/E ratio for BRICs is 11.8 times earnings, while the U.S. is 16.8 and Japan is 19, according to GSAM. The BRIC fund is designed to be part of a core and satellite approach to asset management with the BRIC fund one of the satellites complementing a "core" of more diverse equity and fixed-income assets. Because it will invest in a relatively low number of companies, the BRIC fund is considered more concentrated than many emerging markets funds, and may be more volatile as well. Emerging markets funds have an average volatility of around 20% while the BRIC fund may have closer to 25% volatility, according to Gordon Feature of BRIC COUNTRY The development model of the other BRIC countries seems to have different drivers, much more influenced by natural resources in the case of Russia and Brazil, while India is testing its own version of economic development with a strong component of outsourced services. This new dimension of growth in services rather than manufacturing has been made possible by the advent of the internet and the huge reduction in communication costs linked to it. These new
models for growth have been untested over long periods but may prove to be other pathways for achieving growth 1. Swiftly growing economies 2. Giant countries, with giant populations, 3. LOW cost of production 4. More visibility OF INCOME GROWTHS
BRIC leaders in 2008: Manmohan Singh (India), Dmitry Medvedev (Russia), Hu Jintao (China) and Luiz Inácio Lula da Silva (Brazil). In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by Goldman Sachs in 2001. Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world. Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, like the European Union has done. However, there are strong indications that the "four BRIC countries have been seeking to form a "political club" or "alliance", and thereby converting "their growing economic power into greater geopolitical clout". One of the recent
in the Russian city of Yekaterinburg between the foreign ministers of the BRIC countries.indications was from a BRIC Summit meeting in 2008. culture and fighting drug trafficking. Medvedev has also recently made a trip to New Delhi.
. met with Brazilian President Luiz Inácio Lula da Silva and agreed to visa-free travel. India to meet with Indian President. Prathiba Patil and Prime Minister Manmohan Singh to discuss a nuclear deal as well as agreeing to cooperate in the spheres of finance and financial security. tourism. Also in his Latin America trip Russian President Dmitry Medvedev while visiting Brazil.
The size of the world stock market is estimated at about $36. which traditionally refers to an actual value.. cannot be directly compared to a stock or a fixed income security. Goldman Sachs argues that the economic potential of Brazil.Brazil. the vast majority of derivatives 'cancel' each other out (i. a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring. because it is stated in terms of notional values. and China is such that they may become among the four most dominant economies by the year 2050.). rather than an actual market price. India.6 trillion US at the beginning of October 2008.435 trillion dollars.)
The BRIC term
.The BRIC thesis
São Paulo. 11 times the size of the entire world economy. These countries encompass over twenty-five percent of the world's land coverage. Moreover. they would be the largest entity on the global stage. On almost every scale. The total world derivatives market has been estimated at about $791 trillion face or nominal value.e. Russia. These four countries are among the biggest and fastest growing Emerging Markets. Many such relatively illiquid securities are valued as marked to model. forty percent of the world's population and hold a combined GDP (PPP) of 15. The value of the derivatives market.
Also important to note is the G-20 coalition
of developing states which includes all the BRICs.The Sao Paulo Stock Exchange is the second largest in the Americas and the third largest in the world Various sources refer to a purported "original" BRIC agreement that predates the Goldman Sachs thesis. associate members include India) and the IBSA Trilateral Forum. Oman and the United Arab Emirates) and "BRICET" (including Eastern Europe and Turkey) have become more generic marketing terms to refer to these emerging markets. "BRIMC" (M for Mexico). Trilateral agreements and frameworks made among the BRICs include the Shanghai Cooperation Organization (member states include Russia and China. Evidence of agreements of this type are abundant and are available on the foreign ministry websites of each of the four countries. no text has been made public of any formal agreement to which all four BRIC states are signatories. Bahrain. Kuwait. India. thus far. and South Africa in annual dialogues. Some of these sources claim that President Vladimir Putin of Russia was the driving force behind this original cooperative coalition of developing BRIC countries.
. because of the popularity of the Goldman Sachs thesis "BRIC".
Also. Qatar. that they have not reached a multitude of bilateral or even trilateral agreements. This does not mean. this term has sometimes been extended to "BRICK" (K for South Korea). however. "BRICA" (GCC Arab countries – Saudi Arabia. which unites Brazil. However.
these five economies are likely
to be the world's five most influential economies outside of the G6.
. then they would gain exposure to Asian debt and equity markets rather than to Latin America. By comparison South Korea currently ranks 28th. Brazil's lower growth rate obscures the fact that the country is wealthier than China or India on a per-capita basis. Bulgaria. and agreed with the conclusions. Combined with China and India. and Hong Kong 27th. critical lack of modern infrastructure. the wealthiest regions outside of the G6 in 2015 will be Hong Kong. etc). In terms of GDP per capita in 2007. Hungary.
On the other hand. By comparison the reduced acronym IC would not be attractive.Marketing
The BRIC term is also used by companies who refer to the four named countries as key to their emerging markets strategies. At issue are the multiple serious problems which confront Russia (declining population. the Czech Republic. and the comparatively much lower growth rate seen in Brazil. South
Korea and Singapore. The BRIC's study specifically focuses on large countries. environmental degradation. Many other Eastern European countries. According to estimates provided by the USDA. However. Romania. Slovakia. and several others were able to continually sustain high economic growth rates and do not experience some of the problems that Russia experiences or experience them to a lesser extent. then the BRIC story becomes more compelling. potentially unstable government. has a more developed and global integrated financial system and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential. Russia 54th. Brazil ranks 64th. such as Poland. China 105th and India 131st. when the "R" in BRIC is extended beyond Russia and is used as a loose term to include all of Eastern Europe as well. Singapore 21st. If investors read the Goldman's research carefully. not necessarily the wealthiest or the most productive and was never intended to be an investment thesis. although the term "Chindia" is often used.
because it is stated in terms of notional values. the vast majority of derivatives 'cancel' each other out (i. 11 times the size of the entire world economy. The size of the world stock market is estimated at about $36. The total world derivatives market has been estimated at about $791 trillion face or nominal value. the NASDAQ. a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.6 trillion US at the beginning of October 2008. these are securities listed on a stock exchange as well as those only traded privately. or equity market. European examples of stock exchanges include the London Stock Exchange.) The stocks are listed and traded on stock exchanges which are entities a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together.
. now part of Euronext. as well as on the many regional exchanges. which traditionally refers to an actual value.e. OTCBB and Pink Sheets.WHAT IS EQUITY MARKET? A stock market. the Amex. e. Many such relatively illiquid securities are valued as marked to model. The value of the derivatives market. The stock market in the United States includes the trading of all securities listed on the NYSE.. Moreover.). rather than an actual market price.g. is a private or public market for the trading of company stock and derivatives at an agreed price. cannot be directly compared to a stock or a fixed income security. the Deutsche Börse and the Paris Bourse.
It is used in deriving precisely the degree . and any other values on the basis of some other variable which are financially related to each other. It is used in reducing the range of uncertainty in the matter of prediction. rainfall and yield. sales prices. In the field of economics it is used in understanding the economic behavior. 5. volume of sales. According to SIMPSON and KAFKA "Correlation analysis deals with the association between two or more variables". the two variable are said to have no relation with each other. It is used in presenting the average relationship between any two variables through a single value of co-efficient of correlation. and expressing it in a brief formula is known as correlation". the appropriate tool for discovering and measuring the relationship. height and weight. DEFINITION According to CROXTON and COWDEN "When the relationship is of a quantitative nature. price and demand. 4. and the direction of relationship between variables. and the ratio of variables for a given value of another variable 3.CORRELATION
Correlation in statistics. It is used to developing the concept of regression. Two variables are said to be correlated if with a change in the value of one variable there arises a change in the value of another variable. or more variables viz. Uses of Correlation 1.
. On the other hand if a change in the value of one variable does not bring any change in the value of the another variable. In the field of business it is used advantageously to estimate the cost of sales. 6. refer to relationship between any two. and locating the important variables on which others depend . 2.
In investment terms. gold stock price movements are not closely correlated with utility stock price movements because the two are influenced by very different factors.
. Investments with a negative correlation of . For example. also the method of correlation are used in making progressive developments in the respective lines.1 are more likely to gain or lose value in opposing cycles. In the field of science and philosophy . CORRELATION FINANCIAL The relationship between two variables during a period of time. The concept of correlation is frequently used in portfolio analysis. Investments with a correlation of + 0.5 or more tend to rise and fall in value at the same time.7. correlation is the extent to which the values of different types of investments move in tandem with one another in response to changing economic and market conditions.0. all utility stocks tend to have a high degree of correlation because their share prices are influenced by the same forces.1 to +1.5 to . Correlation is measured on a scale of . especially one that shows a close match between the variables' movements. Conversely.
INTRODUCTION TO BRIC COUNTRIES India
Capital Official languages Government President
) 28°34′N 77°12′E28. Balakrishnan Sansad
. G. English Federal republic  Parliamentary democracy Pratibha Patil
Prime Minister Manmohan Singh Chief Justice K.567°N 77.2°E
and the Bay of Bengal on the east.671 mi).287. and the most populous democracy in the world. see also other Indian languages).269.610. is a country in South Asia. India has a coastline of 7. and Bangladesh and Myanmar to the east.-
Lower House Lok Sabha from United Kingdom 15 August 1947 26 January 1950
Independence Area Total Declared Republic
3.904 (2nd) 2001 census 1. People's Republic of China (PRC).100 trillion (12th) $941 (132nd) Indian rupee (₨) (INR)
GDP (nominal) Total Per capita
India. Bounded by the Indian Ocean on the south. Nepal.210 sq mi
Population 2008 estimate 1. officially the Republic of India (Hindi: भारत गणराजय Bhārat Gaṇarājya. the Arabian Sea on the west. the Maldives.240‡ km2 (7th) 1.147.517 kilometers (4.995.
Economy of India
The economy of India was under socialism-based policies for an entire generation from the 1950s until the 1980s.028. It is the seventhlargest country by geographical area. and Bhutan to the north. It is bordered by Pakistan to the west. the second-most populous country. and Indonesia in the Indian Ocean. India is in the vicinity of Sri Lanka.328 2007 estimate $1. The economy was characterized by extensive
machinery and software design. and industrial sector around 12%. protectionism. Unemployment rate is 7% (2008 estimate). the ongoing economic liberalization has moved India towards a capitalist market economy. more market-friendly states have raised living standards faster and
. increases which will double the average income within a decade. potatoes. goats. India's trade has reached a still relatively moderate share 24% of GDP in 2006.5% a year. steel. wheat. tea. It has created millions of better paying jobs and a fast-growing middle class. which makes it the twelfth-largest economy in the world or fourth largest by purchasing power adjusted exchange rates. India currently accounts for 1. In the late 2000s. poultry and fish. sheep. Major industries include textiles. Agriculture provides livelihood for 60% of Indians. leading to pervasive corruption and slow growth. and public ownership. chemicals. cattle. The service sector makes up a further 28% of employment. mining. India's growth has averaged 7. sugarcane. India's nominal per capita income of $1043 is ranked 136th in the world.5% of World trade as of 2007 according to the WTO. cotton.regulation. For output.237 trillion. According to the World Trade Statistics of the WTO in 2006. transportation equipment. cement. Since 1991. oilseed. Major agricultural products include rice. In 2007. India's GDP was $1. India's total merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and import was $143 billion. up from 6% in 1985. India's global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion. Indian economic reforms have meant growing trade and globalization. the service and industrial sectors make up 54% and 29% respectively. up by a record 72% from a level of $253 billion in 2004.India has economic disparities at the state level. Thus. petroleum. jute. the agricultural sector accounts for 17% of GDP. food processing. water buffalo.One estimate says that only one in five job-seekers has had any sort of vocational training. The labor force totals half a billion workers.
MAIN INDEX OF INDIA
1. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. more than double the same poverty rate in China Even though the Green Revolution ended famines in India. Despite sustained high economic growth rate. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875. 40% of children under the age of three are underweight and a third of all men and women suffer from chronic energy deficiency.higher. BSE has
. 2005 notified by the Securities and Exchange Board of India (SEBI). BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. 1956. With demutualisation.NSE Introduction TO BSE Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage. approximately 80% of Indian population lives on less than $2 a day (PPP).
BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956.BSE 2. pursuant to the BSE (Corporatisation and Demutualisation) Scheme. BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act. now spanning three centuries in its 133 years of existence. Earlier an Association Of Persons (AOP).
2 and 3 Wheelers Bharat Heavy Electricals Ltd. The market capitalization as on December 31. Information Technology ITC Ltd. FMCG ICICI Bank Ltd. Pharmaceuticals DLF Ltd. Banks Hindalco Industries Ltd. Electrical Equipment Bharti Airtel Ltd. Today.Housing HDFC Bank Ltd. BSE 30 ACC Ltd. Developers/Construction Grasim Industries Ltd. B. Automobiles .two of world's best exchanges. Oil Exploration/Production Ranbaxy Laboratories Ltd. BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. T and Z groups.Services Cipla Ltd.4 wheelers Maruti Udyog Ltd. Deutsche Börse and Singapore Exchange. Telecommunication . Automobiles . are classified into A. Power Oil & Natural Gas Corporation Ltd. Banks Infosys Technologies Ltd. which for easy reference. S.4 wheelers NTPC Ltd. as its strategic partners. Pharmaceuticals
. An investor can choose from more than 4. Automobiles .700 listed companies. FMCG Larsen & Toubro Ltd. Diversified Housing Development Finance Corporation Ltd.79 trillion . Aluminium Hindustan Unilever Ltd. Cement and cement products Ambuja Cements Ltd. 2007 stood at USD 1. Finance . Cement and Cement Products Bajaj Auto Ltd. Engineering Mahindra & Mahindra Ltd.
Located in Mumbai. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure. and was incorporated in November 1992 as a tax-paying company. NSE has set up its trading system as a nation-wide. NSE was promoted by leading Financial Institutions at the behest of the Government of India. Capital Market (Equities) segment of the NSE commenced operations in November 1994. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.Software Tata Motors Ltd. Computers . market practices and trading volumes. NSE is set up on a demutualised model wherein the ownership.Reliance Communications Limited Telecom Reliance Energy Ltd. Automobiles . Power Reliance Industries Ltd. management and trading rights are in the hands of three different sets of people. In April 1993.
. NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956.Software State Bank of India Banks Tata Consultancy Services Ltd.4 Wheelers Wipro Ltd. while operations in the Derivatives segment commenced in June 2000. This has completely eliminated any conflict of interest. Refineries Satyam Computer Services Ltd. Computers . Computers – Software NSE National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. fully automated screen based trading system.
4 wheelers Maruti Udyog Ltd.Software Larsen & Toubro Ltd. Automobiles . Power National Aluminium Co.4 wheelers NTPC Ltd. Telecommunication . Electrical equipment ACC Ltd. Computers . Ltd. Refineries Bharti Airtel Ltd. Aluminium Hindustan Petroleum Corporation Ltd.Services Cipla Ltd. Computers .Services Mahindra & Mahindra Ltd. Cigarettes ICICI Bank Ltd. Engineering Mahanagar Telephone Nigam Ltd.2 and 3 Wheelers Bharat Heavy Electricals Ltd.2 and 3 Wheelers Hindalco Industries Ltd. Banks Infosys Technologies Ltd. Automobiles . Finance . Pharmaceuticals Dr.Software HDFC Bank Ltd. Aluminium
. Diversified Housing Development Finance Corporation Ltd. Automobiles . Cement and Cement Products Bajaj Auto Ltd. Cement and cement products Ambuja Cements Ltd. Refineries Hindustan Unilever Ltd. Electrical Equipment Bharat Petroleum Corporation Ltd. Telecommunication . Reddy's Laboratories Ltd. Pharmaceuticals GAIL (India) Ltd. Automobiles . Cement and Cement Products HCL Technologies Ltd.Housing I T C Ltd. Pharmaceuticals Grasim Industries Ltd. Banks Hero Honda Motors Ltd. Gas Glaxosmithkline Pharmaceuticals Ltd.50 COMPANIES ABB Ltd.
Oil Exploration/Production Punjab National Bank Banks Ranbaxy Laboratories Ltd. Pharmaceuticals Reliance Communications Ltd. Pharmaceuticals Suzlon Energy Ltd. Construction Videsh Sanchar Nigam Ltd.Services Reliance Energy Ltd. Telecommunication . Computers .Software Siemens Ltd. Computers . Media & Entertainmen
. Electrical Equipment Tata Consultancy Services Ltd. Telecommunication . Electrical Equipment State Bank of India Banks Steel Authority of India Ltd. Ltd. Steel and Steel Products Sterlite Industries (India) Ltd. Power Reliance Industries Ltd.Services Wipro Ltd. Refineries Satyam Computer Services Ltd.4 Wheelers Tata Power Co. Power Tata Steel Ltd. Metals Sun Pharmaceutical Industries Ltd.Software Zee Entertainment Enterprises Ltd. Automobiles . Steel and Steel Products Unitech Ltd. Refineries Reliance Petroleum Ltd. Computers .Oil & Natural Gas Corporation Ltd.Software Tata Motors Ltd.
1. 0.86% Manchu.917°N 116. 0.CPPCC
state. 0.62% Tujia.15% Korean.44% Tibetan.79% Hui.79% Uyghur.72% Miao.Premier .383°E
91.47% Mongol.President .05% other (See:List of ethnic groups in China) Socialist Single-party communist state Hu Jintao Wen Jiabao
People's Republic of China Zhōnghuá Rénmín Gònghéguó
39°55′N 116°23′E39. 1.65% Yi.NPCSC . 0. 0. 0. 0.30% Zhuang. 0.9% Han.26% Buyei.
Wu Bangguo Jia Qinglin
. 0. 0.
427 sq mi
9.321. who were sinicized into the Chinese polity .612.704. Restraints on foreign trade relaxed and joint ventures encouraged. ECONOMY Economic system in transition. cautiously moving away from Soviet-style central planning and gradually adopting market economy mechanisms and reduced government role. marked by increasing technological advancements and productivity.018 km2
.Total . Private ownership of production assets legal.Total Population
National People's Congress
9.821 km2 or (3rd/4th) 3.888 (1st) .242. although major nonagricultural and industrial facilities still state owned and centrally planned.226 2008 estimate $4. Shanghai Stock Exchange
.2007 estimate 1.Per capita Currency 1.Legislature Area .260 (104th) Yuan (CNY)
China's development was influenced by the alien peoples on the frontiers of Chinese civilization. Industry.851.671.329 trillion (3rd) $3.2000 census GDP (nominal) . largely based on state and collective ownership. China's people's communes eliminated by 1984--after more than twenty-five years--and responsibility system of production introduced in agricultural sector.640.
pinyin: Shànghǎi Zhèngquàn Jiāoyìsuǒ) is a Chinese stock exchange or bourse that is based in the city of Shanghai. Unlike the Hong Kong Stock Exchange.7 trillion. the Shanghai Stock Exchange had 860 listed companies with a combined market capitalization of US$3. Ltd Maanshan Iron & Steel Co.The Shanghai Stock Exchange (SSE) (simplified Chinese: traditional Chinese: . 31 COMPANIES LISTED UNDER SHIANGHAI Kweichow Moutai Co. It is one of the three stock exchanges operating independently in the People's Republic of China.. the Shanghai Stock Exchange is still not entirely open to foreign investors due to tight capital account controls exercised by the Chinese mainland authorities. the other two are the Shenzhen Stock Exchange and the Hong Kong Stock Exchange. and an interest in diversification among the established trading houses (although the trading houses themselves remained partnerships)..
. making it the largest in mainland China and sixth largest in the world.
Shanghai Stock Exchange building (in 2008) at Shanghai's new Pudong financial district. Ltd. At the end of 2007. a legal framework for joint-stock companies.The first share list appeared in June 1866 and by then Shanghai's International Settlement had developed the conditions conducive to the emergence of a share market: several banks.
Chongqing Department Store Co. GITI Tire (China) Investment Company Ltd. Shanghai Pharmaceutical (Group) Co.. Ltd. Ltd. Ningbo Bird Co.. Beijing Shunxin Agriculture Co.. Shanghai Automotive Industry Corporation (Group) Shanghai Bailian Group Co. Handan Iron & Steel Co. Dazhong Transportation (Group) Co. Beijing Tongrentang Co. Ltd. Ltd. China Merchants Bank China Minsheng Banking Corporation Limited China Yangtze Power Co Ltd. Ltd. Ltd.... Ltd... Aerospace Communications Holdings Co. Ltd.. Inner Mongolia Yili Industrial Group Company Limited
.Minmetals Development Co. Ltd Shanghai Pudong Development Bank Sinopec Shanghai Petrochemical Company Limited Xiamen C&D Inc.. Ltd Nanjing Textiles Import & Export Corp Ltd. Ltd. Citychamp Dartong Co. Dashang Group Co. Guangzhou Development Industry (Holdings) Co.. Ltd. Daheng New Epoch Technology. Beiqi Foton Motor Company Limited Beiya Industrial (Group) Co. Datang Telecom Technology Co. Hua Xia Bank Limited Inner Mongolia BaoTou Steel Union Co.. Ltd. Ltd. Inc. Ltd..
Russian Federation Российская Федерация Rossiyskaya Federatsiya
Coat of arms
Capital (and largest city)
55°45′N 37°37′E55.75°N 37.617°E
79.8% Russian 3.8% Tatar 2.0% Ukrainian 1.2% Bashkir 1.1% Chuvash 12.1% others Federal Presidential republic Dmitry Medvedev (Ind.)
Government - President
- Prime Minister Vladimir Putin (UR) Legislature - Upper House - Lower House Federal Assembly Federation Council State Duma Area 24
17,075,400 km2 (1st) 6,592,800 sq mi Population
- 2008 estimate - 2002 census GDP (nominal) - Total - Per capita
142,008,838 (9th) 145,166,731 2008 estimate $1.778 trillion (8th) $12,579 (52nd)
Rossiyskaya Federatsiya), is a transcontinental country extending over much of northern Eurasia. It is a semi-presidential republic comprising 83 federal subjects. Russia is the largest country in the world, covering more than an eighth of the Earth’s land area; with 142 million people, it is the ninth largest by population. It extends across the whole of northern Asia and 40% of Europe, spanning 11 time zones and incorporating a great range of environments and landforms. It has the world's largest forest reserves and its lakes contain approximately one-quarter of the world's unfrozen fresh water. Russia age stucture 14.6% (0-14 years), 71.2% (15-64 years) , 14.1(65-over) Economy Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia. The country ended 2007 with its ninth straight year of growth, averaging 7% annually since the financial crisis of 1998. In 2007, Russia's GDP was $2.076 trillion (est. PPP), the 6th largest in the world, with GDP growing 8.1% from the previous year. Growth was primarily driven by non-traded services and goods for the domestic market, as opposed to oil or mineral extraction and exports. The average salary in Russia was $640 per month in early 2008, up from $80 in 2000. Approximately 14% of Russians lived below the national poverty line in 2007, significantly down from 40% in 1998 at the worst of the post-Soviet
collapse. Unemployment in Russia was at 6% in 2007, down from about 12.4% in 1999.
A Rosneft petrol station. Russia is the world's leading natural gas exporter and the second leading oil exporter. Russia has the world's largest natural gas reserves, the second largest coal reserves and the eighth largest oil reserves. It is the world's leading natural gas exporter and the second leading oil exporter. Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad. Since 2003, however, exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP and the government predicts this will drop to 3.7% by 2011. Russia is also considered well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. The country has more higher education graduates than any other country in Europe. Russia is Europe's key oil and gas supplier. The economic development of the country though has been uneven geographically with the Moscow region contributing a disproportionately high amount of the country's GDP. Much of Russia, especially indigenous and rural communities in Siberia, lags significantly behind. Nevertheless, the middle class has grown from just 8 million persons in 2000 to 55 million persons in 2006. Russia is home to the largest number of billionaires in the world after the United States, gaining 50 billionaires in 2007 for a total of 110. MAIN INDEX
1.RTS 2.RSE Russian Trading System The Russian Trading System is a stock market established in 1995 in Moscow, consolidating various regional trading floors into one exchange. Originally RTS was modelled on NASDAQ's trading and settlement software; in 1998 the exchange went on line with its own in-house system. Initially created as a nonprofit organization, at the moment RTS is in the process of reorganization: it is being transformed into a joint-stock company.
Federative Republic of Brazil República Federativa do Brasil
Coat of arms
15°45′S 47°57′W15.75°S 47.95°W
5% Asian 0.Vice-President -
President of the Chamber Michel Temer (PMDB) of Deputies José Sarney (PMDB) Gilmar Mendes from Portugal September 7.7% White 42.President .937 (63rd) Real (R$) (BRL) 28
.2008 estimate . 1889 Area
.6% Pardo (Brown) 6.665 trillion (10th) $6.342.Total .Per capita Currency
196.597 sq mi Population
.987.877 km2 (5th) 3.2007 census GDP (nominal) .Largest city Official languages
São Paulo Portuguese 49.Recognized .291 2008 estimate $1.Total
8.3% Amerindian Presidential Federal republic Luiz Inácio Lula da Silva (PT) José Alencar (PRB)
Government .President of the Senate . 1825 November 15. 1822 August 29.Chief Justice Independence .287.9% Black 0.Declared .592 (5th) 189.
Portuguese colonists. one of the most beautiful and modern cities in Latin America. and Florianópolis. Much of Brazil's population is concentrated along the coastline. Almost all the capitals are the largest city in their corresponding state. Brazil opened its borders to immigration: people from over 60 nations migrated to Brazil. Most Brazilians can trace their ancestry to the country's Indigenous peoples. except for Vitória. Population of Brazil is made up of many racial and ethnic groups.
.4. the capital of Santa Catarina. and Belo Horizonte. Rio de Janeiro. with 19. the capital of Espírito Santo.4 million inhabitants respectively.
Downtown Rio de Janeiro. 11.Demographics
Boa Viagem beach in Recife. Beginning in the late 19th century. The largest metropolitan areas in Brazil are São Paulo. and African slaves.7. and 5.
orange juice. manufacturing and service sectors.8 billion for 2007. the world's tenth largest economy at market exchange rates and the ninth largest in purchasing power parity (PPP). Brazil is a federation of 26 states. automobiles. as well as a large labor pool. According to the Brazilian Constitution of 1988. ethanol. Inflation monitoring and control currently plays a major role in Brazil's Central Bank activity in setting out short-term interest rates as a monetary policy measure. according to the International Monetary Fund and the World Bank. Brazil is the largest national economy in Latin America. iron ore. Brazilian exports are booming. soybean. corned beef and electrical equipment. mining. The country has been expanding its presence in international financial and commodities markets. with large and developed agricultural. foreign direct investment (FDI). coffee. None of these units have the right to secede from the Federation. less speculative investment in production. one federal district and also the municipalities.Nonetheless. Major export products include aircraft. creating a new generation of tycoons. related to long-term.Economy
São Paulo. textiles. footwear. the wealthiest city of Brazil and the largest financial center of the country. MAIN INDEX 1.RIO DE JANEIRO STOCK EXCHANGE
. steel. is estimated to be $193. and is regarded as one of the group of four emerging economies called BRIC.
This portfolio consists of stocks that represent an aggregate value of 80% of the cash volume traded during the twelve months before the organization of its portfolio. : All exchange listed shares of the telecommunications companies.SAO PAULO STOCK EXCHANGE BOVESPA’s Indexes Ibovespa The Bovespa Index (Ibovespa) is the oldest and most traditional indicator of the average stock price behavior in Brazil. 1968 by a hypothetical investment. in the cash market. weighted in accordance with the number of shares in circulation (free float). It represents the present value. in the current currency. of a stock portfolio organized on January 2. Novo Mercado companies stocks have weight 2.5 and Level 1s have weight 1. measured by their tradability over the last 12 months. Itag : All the shares of companies that offer special tag along rights (spreading control premium) and which were traded at least in 30% of the trading sessions over the last 12 months
. IEE Itel IGC : All exchange listed shares of the electrical power sector companies. : Shares in all companies that adhered to Novo Mercado. weighted in accordance with the number of shares in circulation (free float). IBrX 50 : Top 50 shares most traded in terms of number of trades and financial volume.2. Level 1 or 2. IVBX-2 : 50 shares ranked in decreasing order of liquidity (starting from the 11th).
with weighting in accordance with the Corporate Governance commitment.BOVESPA 3. Level 2s have weight 1. IBrX-100 : Top 100 shares most traded in terms of number of trades and financial volume. in the cash market.
Something approaching a consensus now exists over the lack of effectiveness of universally applicable holistic reform programs. namely: why has China grown so rapidly and Brazil not. Given the agnosticism about total liberal packages and the puzzle of why incomplete reformers grew better. A brief resume of the possible available references is presented below: Fernando Ferrari-Filho And Anthony Spanakos (2007) tried to find out "Why Brazil Has Not Grown: A Comparative Analysis of Brazilian and Chinese Economic Management" . An interesting point of divergence among the BRICs is in the area of economic growth and reforms: the BRIC countries which pursued liberal reforms more aggressively and holistically (Russia and Brazil in the 1990s) grew far slower than those who were more heterodox (China since the 1980s. and India in the 1990s). This is counter-intuitive since conventional wisdom holds that China and India’s growth have largely been the result of freeing up their economies. It gives an eye view of the findings of other academic researchers who have follow the path with the study needs to tread. This paper aims to answer a very basic question asked by not only Brazilians. a review of literature available on the subject to provide a glimpse of the studies done so far on the "Comparative study of Equity Markets of BRIC Countries" . but people in other developing countries where liberal reform agendas were oversold. It also aims at a partial explanation by surveying the results of a generation of Washington Consensus era growth. the paper engages in a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic
.REVIEW OF LITERATURE In this an attempt has been made to present in brief.
policy. 2005).9%. the equity markets in the BRICs countries had expanded tremendously (in Brazil by 369. real GDP growth rates in China.2%. N-11. respectively)” (Leme. BRICs.8% and 3. and its effect on growth . has contributed to slow start-stop growth and has been relatively high inflation. and Stupnystka. between 2000 and 2006 Brazil averaged only 3. since 1999. 20071. while the more managed approaches favored by China have done the reverse. In the introduction. That is. 8. 2007. The governments in each of these countries entered the post-World War II period.9%. and China by 201. O’Neil.0%. Finally.0% – see O’Neill. especially the monetary and exchange rate regimes. and other possible markets.75 ) All four countries had economies where state intervention was considerable up until the 1980s (Brazil and China) or 1990s (Russia and India) and all have moved considerably in favor of freeing market actors and reducing the role of the state. India and Russia have averaged 10. the N-11 (11 other countries that have growth potential). they published Brics and Beyond. Purushothaman. Jim.0%. the paper concludes offering policy advice to the other developing countries. in each case far exceeding our estimates of their long-term potential (4. p. with a very clear awareness of a need to catch up and with a belief that governments should either actively fill market gaps or that they should wholesale
.5%. Jim O’Neill wrote that since the original paper on the BRICs countries was written.0% and 6.5) and that Goldman Sachs continues to be bullish about them.1% economic growth. Since 2003. Wilson and Purushothaman. the Brazilian experience with inflation targeting and flexible exchange rate regime. or otherwise. writing “Brazil has underperformed not only relative to our expectations but also compared with all the other BRICs. a full-length book which collected essays that analyzed the trajectories of the BRICs countries. p. 5. regardless of equity market growth. After all.0%. India by 49. Goldman Sachs’ Paulo Leme was sanguine about this. In 2007. Russia by 630.
Thus. save traditional sectors which were increasingly disadvantaged by macroeconomic policies. The rise in global interest rates. The BRICs countries differed in the speed. displayed little interest in trade. sharp fall in oil prices and global consumption in the early 1980s exposed many structural weaknesses in the models pursued by all four countries. Nevertheless. it did so through the Council of Mutual Economic Assistance. what is telling is the stark difference in economic growth over the last decade. understood its trade profile as part of a larger context of Communist solidarity and its trade was determined by political motivations more so than by traditional concerns of price. Given these similarities. India and China. China to a much lesser extent). a relatively closed association. all moved towards liberalizing their economies to degrees unknown by any of those countries for most of the twentieth century.while the Soviet Union was engaged in trade. All pursued policies that were decidedly inward in orientation and Brazil. while more global in orientation. The Soviet Union economy. given that the explanation of the growth of China and India is normally understood as the result of liberalization. felixibilizing labor contracts and rights.collectivize productive activity. Certain commonalities existed among the many countries and regions in the world which had been hit hard by the rise in oil prices. Importantly. it is important to address why liberalization did not have the same effect in Brazil and Russia (in the 1990s). and welcoming foreign and domestic private investment. all moved towards transforming state-owned enterprises into private or mixed partnerships whose performance would be determined by market rather than political conditions. and content of the reforms that they implemented. pace. particularly in industries once considered sensitive or part of national security (again. More specifically. productivity and quality. Post War policies involved state-led growth through ambitious multi-year industrialization plans with considerable variety in degrees of success.
. increasing the role of domestic and foreign (China to a lesser extent) participation in capital markets. as well as the amount of pressure they endured from international financial institutions and trading partners.
due to their measures of capital controls. This suggests the necessity of (i) ensuring that monetary policy has a significant positive impact on the level of economic activity. It does find that certain policies do seem to have more of an effect in limiting external vulnerability and in producing growth. It has done this by comparing Brazil to peers in the BRICs group. inefficient tax collecting agencies. This confirms Ferrari Filho and Paula (2006) who find that economic performance of BRICs countries is the result of the exchange rate regime. and (iii) creating efficient anti. rigid labor markets. and its aftermath. Interestingly enough. and lack of credibility of monetary policy makers. gleaning information from recent research on the relationship between reforms and growth. (ii) directing financial markets toward financing development rather than rentier-like behavior. excessive indebtedness (often incurred in a foreign currency). overvalued exchange rates. in a panel
. and by a focused comparative case study with China. among others. The paper agrees with the finding in the literature that broad liberal reform agendas do not necessarily produce stable and robust economic growth. despite considerable liberal reforms.speculation mechanisms to control (or regulate) movements of capital in order to prevent monetary and exchange rate crises and augment the autonomy of domestic decision makers. while China. capital account convertibility and fiscal and monetary regimes adopted in each country. financial liberalization and capital mobility in the Brazilian economy in the 1990s were at the center of its currency crisis. Exploring the last issue. This comparative study of Brazilian and Chinese macroeconomic policies and outcomes aims to address the puzzle of why the Brazilian economy. particularly policies that allow government’s to maintain autonomy of macroeconomic policies. has not produced stable and robust growth. could manage monetary and fiscal policies proeconomic growth. paraphrasing and adapting Stiglitz (2002).the global recession in the early 1980s. the main difference among Brazil and China is that. These conditions included high or hyper-inflation.
But when Brazil is compared against China. Shuming Bai (Department of Economics and Finance. an equities tracker in New York. Although academic literature has yet to produce clear causal relationships which explain the necessary components for such growth and how to bolster these components. On the contrary.survey of 49 developing countries between 1970-1995. India at 48%.s market capitalization has surpassed one trillion value in USD. Thus. Brazil at 38%. both Shanghai and Shenzhen. China has grown so robustly and consistently. 2007 ) analyse "The BRIC Impact in Global Financial Markets". Nugent and Pashamova (1998) find that most policy reforms did not have much of an effect on attracting FDI. College of Business Administration. the emerging market
. the major stock exchanges declined consecutively for four years until July 2005 when the markets turned around. empirical analysis of peer country performance gives valuable signals to policy makers. a strong case may be made for why growth may be weak and interrupted. making it the world. and Japan at 7%.s fourth largest economy in 2005 by World Bank. It may be difficult to say exactly why. The University of Texas . According to MSCI Barra. the big emerging markets outperform all major mature markets in 2006. positioning it as Asia. though capital controls were associated with an increase in FDI and the most important factor was economic growth.s third-largest market after Japan and Hong Kong.s FTSE at 11%. with China leading at 59% return in US dollar. Although China. Gastanaga. especially in the developing world. and Mexico at 36% contrasting US S&P 500 at 14% and London. Bloomberg in January 2007 reports China.s economic boom has been carried forward at a speed of annual GDP growth of over nine percent for the past twenty-five years. with academic certainty. its equity market performance has not impressively reflected it. followed by Russia at 50%. Pan American. Uninterrupted and robust economic growth is the goal of all policy makers.
there was no study before that put China. For global investors. China may exert relatively greater influences in the world financial market in the years to come.returns provided great diversification benefits when the US and other leading markets were soft. the impulse response analysis in the VAR of nine variables for the. This study updates and extends previous literature on dependencies in stock market indexes and exchange among the five largest emerging economies (the BRIMC) and four developed equity markets in multivariate cointegration analysis.
. To our best knowledge. For the policy makers. Among the three emerging markets. For the developed markets. However. Empirical data show that each univariate series of stock prices has a unit root. Our findings have implications for policy makers and global investors. The multivariate conitegration test and the error correction model suggest a long-run equilibrium relationship among the nine national stock price indexes for the fullsample period and the two post-crisis periods. the cointegrating relations provide them (especially emerging markets) knowledge to adopt more appropriate stock market policies and regulations from the developed markets. this study sheds more light on how these three emerging markets are related to each other and to other developed markets so that they can diversify and invest globally for greater benefits.s stock market reform and regulation. the empirical evidence is rather weak. policy makers also need to cope with a world that is far more competitive and dynamic than before and tackle the changes created by global linkages. Russia and India. China shows a little more influence than the other two due to its close linkage with the Hong Kong market. In the short run. along with its continuously spectacular economic development. This results conforms with previous study by Masih (1999). China and Russia also show more connection between each other than with India. With China. Brazil and Mexico together in one analysis to see their relative impact on each other and on other developed markets.
CET. m. Due to regulatory restrictions in the individual countries and the usually higher level of liquidity in comparison with the underlyings.
. The maximum proportion attributed to each individual index member is 10 percent. Each country is represented by ten companies. for countries. As for China. Russia. and India are charted via ADRs relating to the respective companies. the average daily trading volume of each ADR must exceed US$ 1 million. which are the largest in terms of market capitalization and are very liquid in terms of turnover. In order to qualify.DEUTSCHE BORSE AG (February. a cap is set at 35 percent. and China. and 10 p. The weighting is adjusted every three months in order to guarantee the clarity and balance of the index. The index weighting is based on the market capitalization of the individual companies. India. the stocks from Brazil. the composition is reviewed on an annual basis. transparent and liquid index to give investors the opportunity to participate in these four up-and-coming growth markets: the DAXglobal® BRIC index (January 2007)
DAXglobal® Average annual performance Annual volatility Correlation Beta BRIC Index 28.91 % 0.4750 0.34 % 22. the calculation of the DAXglobal® BRIC index also takes account of the performance of H-shares and red chips from the Hongkong exchange. Russia. m.8057
The index portfolio of the DAXglobal® BRIC comprises the top 40 companies from Brazil. The DAXglobal® BRIC index is disseminated in real time and calculated every trading day between 9 a.2007)
Deutsche Börse has developed a
US dollars and pounds sterling allows issuers to offer products in various currencies based on the new index. they should consider investing in specific areas of growth within the economy rather than the country index. however for an outstanding investment performance. We find that India shows the highest level of regional and global integration among the BRIC countries. Calculating the index in euros. conversion into US dollars and pounds sterling takes place in real time. followed by Brazil and Russia and lastly by China.Deutsche Börse also provides a performance indicator once a day based on the closing prices.
. which indicates a presence of diversification opportunities for portfolio investors. There is a negative relationship between the location conditional volatility of India with that of the Asia-Pacific region and of China with the world. their respective regions and the world. Portfolio investors can continue to receive sound returns from taking positions in the index of these countries. Ramaprasad Bhar and Biljana Nikolova (14 July 2008) study the level of
integration and the dynamic relationship between the BRIC countries.
OBJECTIVES Following are the objectives of the study:
5. To Study the affect the U.S. To find the level of Correlation of equity markets among the BRIC Countries. To find the level of Correlation of BRIC Markets with Crude Oil Prices and Gold Prices.
. 3.1. 4. To study the factors which lead to the rise of the Equity Market in BRIC Countries. To study the Equity Market of BRIC Countries. 2. Financial Crisis on Equity Markets of BRIC Countries.
books etc. SOURCES OF DATA COLLECTION: Primary and Secondary sources of information were utilized for the collection of required data.It is imperative to decide upon and document a research methodology well in advance to carry out the research in a most effective and systemic way. Mathematical Formulas are used to find the correlation
. To find the effect of change in OIL and GOLD PRICES on INDIA AND RUSSIA
5. To find the correlation between SENSEX and GOLD Price 4. questionnaires etc. PRIMARY DATA Primary data are the first hand information. as comprehensive analysis requires a great deal of it. It can be collected by interview. which we can get directly from the people working in that concern. Internet. I am using secondary sources of the data collection. survey. Following are the areas which are covered:1. 2. The present study being qualitative as well as descriptive in nature was based on study of secondary data . SECONDARY DATA The secondary data is the information about the facts that we can get from published materials such as books. journal . ANALYSIS In my project the source of data collection is Secondary. This section describes the research methodology adopted to serve the objectives of the study in an effective manner. Analysis was done by performing basic mathematics operations on the data collected. To find the correlation between SENSEX values and OIL Price. To find the correlation between INDIAN and RUSSIAN Equity Market. 3.
A commonly used formula is shown below.The formula for Pearson's correlation takes on many forms.
N =Number of values or elements x=First Score Y = Second Score ΣXY = Sum of the product of first and Second Scores ΣX = Sum of First Scores ΣY = Sum of Second Scores ΣX2 = Sum of square First Scores ΣY2 = Sum of square Second Scores
5.1 Graph shows the value of RTS
3000 2500 Index Value 2000 1500 1000 500 0
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 07 1/ 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09
Jan06 36 69
June06 4 30
Jan07 34 32
June07 8 -5
Jan08 43 25
June 08 -21 7
Jan09 -38 -74
.CORRELATION BETWEEB RUSSIA AND INDIA INDEX Comparing the values of RTS EXCHANGE and NSE Stock Exchange.1 Table shows the value of RTS
June 08 631
5.2 Table showing % change in index of RUSSIA And INDIA
June04 -21 -2
Jan05 38 9
These may be Foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries are of similar nature. It means the factors that affect are same.
.68 INTERPRETATION There exist a fairly high correlation between the Russia and India. If the value of one is increasing then the value of other is also increasing but the rate of increase is different.5.2 Graph showing % change in index of RUSSIA And INDIA
India And Russia 80 60 % Change in values 40 20 0
1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 05 1/ 1/ 20 6/ 1/ 20 05
-20 -40 -60 -80 -100
6/ 1/ 20
CORRELATION Correlation between these two are R = 0.
3 Table showing % change in RTS values and GOLD prices
Particular Gold Russia
June04 -5 -2
Jan05 10 9
June05 -5 10
Jan06 24 69
June06 22 30
Jan07 1 32
June07 5 -5
Jan08 25 25
June 08 6 7
Jan09 -2 -74
5.4 INTERPRETATION There exist low correlation between these. CORRELATION Correlation = 0 .
1/ 1/ 20 09
1/ 12 00
.COMPARING RUSSIAN STOCK EXCHANGE WITH CHANGING PRICE OF GOLD 5.3 Graph showing % change in RTS values and GOLD prices
Russia And Gold
% Change in values Russia Gold
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08
. The effect of change in price of gold effects little the equity market of Russia.
It means the economy of both the countries is some where similar in nature and some factors which affect one also affect to the other.5 INTERPRETATION There exists moderate correlation between these.
.4 Table showing % change in RTS values and China Index values
Country China Russia June04 6 -2 Jan05 -20 9 June05 -19 10 Jan06 12 69 June06 45 30 Jan07 59 32 June07 50 -5 Jan08 32 25 June 08 -35 7 Jan09 -47 -74
5.FINDING CORRELATION BETWEEN CHINA STOCK MARKET AND RUSIA INDEX
5.4 Graph showing % change in RTS values and China Index values
Russia And China 100
% Change in Values
50 0 -50 -100
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09
CORRELATION Correlation = 0 .
6 INTERPRETATION There is fairly high correlation between these two countries.5 Graph showing % change in RTS values and China Index values
Brazil and Russia 100 % Change 50 0
Rus s ia Brazil
CORRELATION Correlation = 0 .5 Table showing % change in Brazil and Russia Index values
Country Brazil Russia
June04 -13 -2
Jan05 49 9
June05 -11 10
Jan06 29 69
June06 13 30
Jan07 18 32
June07 20 -5
Jan08 20 25
June 08 14 7
Jan09 -48 -74
5. It means the factors that affect are same. These may be Foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries are of similar nature.
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09
.FINDING CORRELATION BETWEEN RUSSIA INDEX AND BRAZIL 5.
6 Table showing values of NIFTY
Country India Jan04 1912.6 Graph showing values of NIFTY
7000 6000 5000 4000 3000 2000 1000 0
5.9 Jan05 2080.25 Jan07 3966.FINDING CORRELATION BETWEEN INDIAN STOCK MARKET AND GOLD PRICE 5.45
5.55 Jan06 2836.5 June05 2087.05
June 08 4870.3
Jan06 24 36
June06 22 4
Jan07 1 34
June07 5 8
Jan08 25 43
June 08 6 -21
Jan09 -2 -38
.4 June07 4297.7 Table showing % change in Index values Nifty and Gold prices
Particular Gold India
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 1/ 0 5 12 0 6/ 06 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09
June04 -5 -21
Jan05 10 38
June05 -5 0.25 June04 1507.55 June06 2962.
7 Graph showing % change in Index values Nifty and Gold prices
In d ia A n d G o ld
20 0 1 6 1 6 1 7 1 6 8 . There exist moderate correlation between these. There is very little effect of change in prices of gold with change in stock value of India.5.
.2 0 6 /1 /2 0 0 4 /1 /2 0 0 5 /1 /2 0 0 5 /1 2 0 0 6 /1 /2 0 0 6 /1 /2 0 0 6 /1 /2 0 0 7 /1 /2 0 0 8 /1 /2 0 0 1 /1 /2 0 0 9 -40 -60
India G old
D a te
CORRELATION Correlation = .44 INTERPRETATION Rang of correlation lies between -1<=r <=1 .
8 Graph showing values of SSE COMPOSITE INDEX
Index Values China Index
4000 3000 2000 1000 0
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 1/ 0 5 12 0 6/ 06 1/ 20 1/ 0 6 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09
Jan06 36 12
June06 4 45
Jan07 34 59
June07 8 50
Jan08 43 32
June 08 -21 -35
Jan09 -38 -47
.8 Tables showing values of SSE COMPOSITE INDEX
Country China Country China 1/1/2004 1494 1/1/2008 5262 6/1/2004 1580 6/1/2008 3433 1/1/2005 1267 1/1/2009 1821 6/1/2005 1034 1/12006 1161 6/1/2006 1684 1/1/2007 2675 6/1/2007 4001
5.9 Table showing % change in China and India Index values
Country India China
June04 -21 6
Jan05 38 -20
June05 0.FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND INDIA INDEX VALUES 5.
.9 Graph showing % change in China and India Index values
C h in a An d In d ia
%Change in value
India C hina
50 0 -50 -100
D a te
6/1/2004 1/1/2005 6/1/2005 1/120066/1/2006 1/1/2007 6/1/2007 1/1/2008 6/1/2008 1/1/2009
CORRELATION Correlaiton = .5.49 INTERPRETATION There exists a positive and moderate correlation between these two countries. Certain factors are same which affect the economy and equity market of both the countries.
10 Table showing value of BOVESPA Index
Country Brazil Country Brazil 1/1/2004 22445 1/1/2008 63886 6/1/2004 19546 6/1/2008 72593 1/1/2005 29196 1/1/2009 37550 6/1/2005 37748 1/12006 33456 6/1/2006 37748 1/1/2007 44474 6/1/2007 53423
5.11 Table showing % change in Brazil and India Index values
Country India Brazil
June04 -21 -13
Jan05 38 49
June05 0.FINDING CORRELATION BETWEEN BRAZIL AND INDIA INDEX VALUES
Jan06 36 29
June06 4 13
Jan07 34 18
June07 8 20
Jan08 43 20
June 08 -21 14
Jan09 -38 -48
.10 Graph showing value of BOVESPA Index
80000 70000 60000 50000 40000 30000 20000 10000 0
1/ 1/ 20 6/ 0 4 1/ 20 1/ 0 4 1/ 20 6/ 0 5 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 6/ 0 7 1/ 20 1/ 0 7 1/ 20 6/ 0 8 1/ 20 1/ 0 8 1/ 20 09
BOVESPA As On
That means the economy of these two countries behaves same in same situations and both are inter related.7 INTERPRETATION It shows there exist fairly high correlation between these two.11 Graph showing % change in Brazil and India Index values
Brazil and India
60 40 20 0 -20 -40 -60
% Change in value
CORRELATION Correlation = .
06 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 2 00 9
6/ 1/ 2
1/ 1/ 2
6/ 1/ 2
1/ 12 0
.5. These may be foreign capital flow and high correlation of both the countries with the World Equity Market It shows that the Economy of these countries is of similar nature.
There is near about no effect if the prices of gold are changing on the equity market
1/ 1/ 20 09
1/ 12 00
.25 INTREPRETATION It shows there is very low correlation between change in price of gold and change in value of China index .12 Table showing % change in China Index values and Gold prices
June04 -5 6
Jan05 10 -20
June05 -5 -19
Jan06 24 12
June06 22 45
Jan07 1 59
June07 5 50
Jan08 25 32
June 08 6 -35
Jan09 -2 -47
5.12 Graph showing % change in China Index values and Gold prices
China And Gold
% change in value
60 40 20 0
6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08
CORRELATION Correlation = .FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND GOLD PRICE 5.
.13 Table showing % change in China Index values and Brazil Index
June04 -13 6
Jan05 49 -20
June05 -11 -19
Jan06 29 12
June06 13 45
Jan07 18 59
June07 20 50
Jan08 20 32
June 08 14 -35
Jan09 -48 -47
5. It shows the
economy of the countries is different.FINDING CORRELATION BETWEEN CHINA SSE COMPOSITE INDEX AND BRAZIL INDEX 5. The factors that affect the equity market are different.3
It shows there is low correlation between these two countries.13 Graph showing % change in China Index values and Brazil Index
C h ina And B raz il 100
%Change in value 6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 China Braz il
Correlation = .
01 INTERPRETATION It shows the negative very low near about no correlation between the rise of gold prices and BRAZIL Index. Negative correlation means if the price of one is increasing then the price of other is decreasing.14 Graph showing % change in Gold Price and Brazil Index
Brazil And Gold
%Change in value 60 40 20 0
00 5 6/ 1/ 20 1/ 1/ 2
6/ 1/ 2
CORRELATION Correlation = -.14 Table showing % change in Gold Price and Brazil Index
June04 -13 -5 Jan05 49 10 June05 -11 -5 Jan06 29 24 June06 13 22 Jan07 18 1 June07 20 5 Jan08 20 25 June 08 14 6 Jan09 -48 -2
5.FINDING CORRELATION BETWEEN GOLD PRICE AND BRAZIL INDEX 5.
00 5 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09
15 Table showing % change in Oil Price and India Index
June04 9 -17
Jan05 18 31
June05 25 9
Jan06 20 39
June06 9 -3
Jan07 -26 50
June07 28 8
Jan08 32 19
June 08 41 20
Jan09 -71 -36
5. It indicates the oil prices and index value of India rise because of speculation of world is in rising.15 Graph showing % change in Oil Price and India Index
Oil and India 100 % Change in value 6 50 0
1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09
/1 /2 00 4
CORRELATION Correlation = .FINDING CORRELATION BETWEEN OIL PRICE AND INDIA INDEX Oil prices are taken as DOLLAR PER BARREL and the average of the month is taken to find the correlation. 5.37 INTERPRETATION
It shows the low but positive correlation between the rise in the price of Oil and India Index value.
16 Graph showing % change in Oil Price and Brazil Index
Oil and Brazil
60 40 20
CORRELATION Correlation = . it means if the prices of oil increases then index value of Brazil also increases.FINDING CORRELATION BETWEEN OIL PRICE AND INDIA INDEX 5.5 INTERPRETATION It shows there is high correlation between these two .
% Change in values 6/ 1/ 20 04 1/ 1/ 20 05 6/ 1/ 20 05 1/ 12 00 6 6/ 1/ 20 06 1/ 1/ 20 07 6/ 1/ 20 07 1/ 1/ 20 08 6/ 1/ 20 08 1/ 1/ 20 09 0 -20 -40 -60 -80 Date
.16 Table showing % change in Oil Price and Brazil Index
June04 9 -11 Jan05 18 22 June05 25 4 Jan06 20 37 June06 9 -2 Jan07 -26 28 June07 28 23 Jan08 32 4 June 08 41 19 Jan09 -71 -42
FINDING CORRELATION BETWEEN OIL PRICE AND RUSSIA INDEX 5.Russia is an oil producing country when the prices of oil increases the value of Index also increases and decreases when oil prices decreases. it means if the prices of oil increases then index value of Russia also increases .
.49 INTERPRETATION It shows there is high correlation between these two .17 Graph showing % change in Oil Price and Russia Index
Russia and Oil
% Change in 100 values 50 0
00 4 00 5 00 5 00 6 00 7 00 7 00 8 6/ 1/ 2 1/ 1/ 2 1/ 12 0 6/ 1/ 2 1/ 1/ 2 1/ 1/ 2 6/ 1/ 2 6/ 1/ 2 1/ 1/ 2 6/ 1/ 2 00 9 00 8 06
CORRELATION Correlation = .17 Table showing % change in Oil Price and Russia Index
June04 9 -3 Jan05 18 6 June05 25 12 Jan06 20 77 June06 9 1 Jan07 -26 45 June07 28 1 Jan08 32 -1 June 08 41 12 Jan09 -71 -68
It means if the prices of oil increases then index value of Brazil also decreases stay unchanged..18 Table showing % change in Oil Price and China Index
June04 9 -3 Jan05 18 6 June05 25 12 Jan06 20 77 June06 9 1 Jan07 -26 45 June07 28 1 Jan08 32 -1 June 08 41 12 Jan09 -71 -68
5.18 Graph showing % change in Oil Price and China Index
China And Oil 100
% Change in Oil China
value 6/ 1/ 20 0 4 1/ 1/ 20 0 5 6/ 1/ 20 0 5 1/ 12 0 06 6/ 1/ 20 0 6 1/ 1/ 20 0 7 6/ 1/ 20 0 7 1/ 1/ 20 0 8 6/ 1/ 20 0 8 1/ 1/ 20 0 9
CORRELATION Correlation = . China is
not oil producing country so when the prices of oil increases import charges also increases and it results into decrease in the value of index.
.01 INTERPRETATION It shows there is negative correlation between these two.FINDING CORRELATION BETWEEN OIL PRICE AND CHINA INDEX 5.
1 9/1/2008 -10 -19.Global Financial Crisis And Emerging Markets CORRELATION BEFORE CRISS 5.May.4 3.Apr08 08 08 08 08 08 08 08 08 08 08 09 09 09 09 India Oil Rus sia
CORRELATION India & Oil = 0.6 -20.Mar.7 0.8 0.Feb.6 -10.Nov.5 -1.
.11 Russia & Oil = 0.19 Tables showing the value of India and Russia Index and Prices of Oil
2/1/2008 -0.42 INTERPRETATION Correlation between India and Oil is low and between Russia and oil is high.Jul.4 6/1/2008 -17 8.Sep.19 Graph showing the value of India and Russia Index and Prices of Oil
India.9 8/1/2008 12 -7.27 21.9 7/1/2008 -6 -0.9 5/1/2008 6 11.5 18.63
12/1/2008 3 -31.2 -33.Aug.5 3.It shows the equity market of Russia affects with changing prices of oil.Apr.4
2/1/2009 2 -4 12.7
1/1/2009 -0.Mar.6 3.Russia And Oil 40 20 0 -20 -40
Points Feb.Jun.Jan.2 0 4/1/2008 4 1.4 3.17 -1.2 3/1/2008 -11 14.08 -17.45
India Oil Russia
India Oil Russia
11/1/2008 -0.7 8.1 -39.8
4/1/2009 22 14. If the prices increases the index moves up if decreases then move down.7 4.Oct.Dec.9 10/1/2008 -32 -31.
However. value. 2. including European banks with free cash to go assetshopping. in a rather short. when sub-prime borrowers failed to repay their mortgages. Instruments of this nature increase the probability of foreclosure. but occurred at the same time the housing market and valuations cooled. with the risk of potentially large adjustments to monthly payments if interest rates rose. inciting foreclosures. unmanageable timeframe. This left the lending institutions with assets of significantly reduced. with a higher risk profile (such as borrowers with low incomes. as expected. Most of the sub-prime mortgages were given out on a variable interest-rate basis.S. an ever expanding housing market would still improve the lender’s overall position. bad credit histories or limited disposable income). making them attractive to international investors. The problem was that assets with different risk profiles were bundled together and nevertheless received a high investment grading. Increasingly. and in some case worthless. However. the originating institution needed to finance the foreclosure with their own money. bringing the asset back on its balance sheet. the fact that nobody knew how much more of those MBS would return on their balance sheets. these products had been bundled together with prime mortgages and a variety of assets to be sold on the market (so-called mortgage-backed securities. Even if some of the sub-prime borrowers would default. And why did it spread out globally? Many of these sub-prime mortgages actually never made it on the balance sheets of the lending institutions that originated them. Institutions (lenders) were “easy” with credit regarding these mortgages under the assumption that housing prices would continue to appreciate in value.
. This left many banks in a financially unviable situation. 1. Sub-prime mortgages are a financial innovation designed to provide home ownership opportunities to borrowers in the U. money market rates increased.How did a “house fire” in America turn into a global banking crisis? 1. MBS). And.
6 -2.7 7/1/2007 4.3
India Oil Russia
India Oil Russia
10/1/2008 -32 -31.7 9.6 6/1/2007 1.6 -20.7
1/1/2009 -0.1 4/1/2007 0.5 18.2 8. Arguably.6 9 5/1/2007 11 -0.7 8.5 4. The BRIC countries consist of Brazil. As the financial crisis continues to roil credit and stock markets around the globe.7 5.5 -1. both in the US and in Europe.1 -39.5 3.4 3/1/2007 -4 -1.8 0.58
12/1/2008 3 -31.7 5.banks effectively stopped lending to each other.27 21.63
4/1/2009 22 14.9 9/1/2007 10. the climax of the financial crisis has been reached with the collapse of Lehman Brothers on September 15.8
11/1/2008 -0.2 -6. India and China is no exception.7 4.3 4.45
3/1/2009 -7. and the subsequent fall of stock markets all around the world.32 8. drying up liquidity substantially.4
2/1/2009 2 -4 12.9 8/1/2007 -4.
CORRELATION AFTER CORRELATION 5.06 -9.5 -4. The US financial crisis that started in July 2007 with the collapse of two Bear Sterns subprime hedge funds has now turned into a full-blown global economic crisis. there seems to be no country or continent is being spared the consequences.20 Tables showing the value of India and Russia Index and Prices of Oil
2/1/2007 -3 13.4 2.
31 Russia and Oil = 0.42 Interpretation After crisis correlation between India and Oil increases. As the credit crunch crisis has intensified. Correlation between Russia and Oil remain same.20 Graph showing the value of India and Russia Index and Prices of Oil
In d ia .R u s s ia A n d O il
40 20 0 -2 0 -4 0 -6 0 D a te
In d ia Oil R u s s ia
Fe b .O ct.Ja n .Ma r. and sharply raising costs of credit.Ju l.Ap r. Generally risks to BRIC markets have intensified…The BRIC had been fairly resilient to the global credit turmoil.Ma y.Ju n . however the giant economy is slowly facing greater risks. The pronounced reduction in investors’ risk appetite has resulted in a retrenchment in short-term capital flows to the BRIC markets.Ap r08 08 08 08 08 08 08 08 08 08 08 09 09 09 09
CORRELATION India and Oil = 0.5.Ma r. Deleveraging by global financial institutions has raised the cost and reduced the availability of external financing and investor risk appetite has decreased. reducing the demand for BRIC market assets. exerting pressure on local markets. BRIC countries that once appeared relatively immune to the financial and economic shocks emanating from mature markets have increasingly been tested.Fe b .Au g -S e p .
.N o v-D e c.
China’s stocks fell to the lowest in almost 21 months after China Merchants Bank Co.
. Growth slowdown as high energy prices inhibit household spending and a spillover from the US slowdown impacts exports. Other activities continued to be supported by steady investment growth and accelerating consumption. India’s private consumption and export growth have held up well amid the global financial crisis. The risk is for a higher than expected slowdown in emerging market economic growth under the weight of higher costs.9% compared to 8. the impact of rising prices on basic necessities and rising interest rates could be quite damaging for growth in these economies and traumatic for their societies. Investors will likely remain on the sidelines as BRIC equity markets go through a correction after rising rapidly over the past three years. lower household spending and higher interest rates.. threatening to slow economic growth in the near future. and has since pushed up interest rates and increased uncertainty. as do equities across the world. then moved to the currency markets. said it held USD70mln of debt issued by bankrupt Lehman Brothers Holdings Inc. China’s GDP appears to be the most resilient. Case in point is Russia. it struck at Brazilian equities first. Indeed. However. As of this writing.5% in 1H08 from 12% in 2007 due to slowing exports. GDP growth in China however eased to 10. if food and oil prices continue higher.Economic growth in India in 2Q08 moderated to 7.8% in 1Q08 underpinned by a weakening investment. Among the BRIC countries.
When the global financial crisis arrived. Brazilian equities continue to fall. when regulators halted stock trading for a second day and poured USD44bln into its three biggest banks in a bid to halt the biggest financial crisis since its devaluation and debt default a decade ago.
S slowdown. notably the EU (which accounts for 24% of Brazil’s exports) and China(6%). Emerging Markets started underperforming the World Markets. Commodity prices are weak and there are concerns about growth and demand for commodities Lower export growth… Export growth in Brazil is expected to come down below trend. even before the October crisis. Despite the moderate increase in the GDP growth. While the country is set to post 5. The financial crisis and decline in commodity prices which tend to reduce the amount of exports contribute to lower growth BOVESPA In the beginning of 2008. coffee. soybeans.84% in 1Q08.8%. and activity would remain sluggish in Mexico as exports and remittances are dampened by the US slowdown.13% y-o-y from 5. but with other important export destinations faltering. The financial crisis has triggered downwards revisions in economic growth in Brazil for 2009. MSCI Emerging Markets/MSCI World Markets showed some weakness. The country is less reliant on US demand than in the past (exports to the US are down from around 27% of the total in 2003 to 15% in 2008). the GDP growth began to slow in 2008. Main export goods for Brazil are transport equipment. However.
. the forecast for 2009 is 2. Brazil’s economy is facing an awkward combination of slow activity and more difficult external conditions. and automobiles.the country is vulnerable to trade contagion. iron ore. In 2Q08. Growth in Brazil is forecasted to decrease below trend as exports and remittances are dampened by the U.1% GDP growth for 2008. footwear. Brazil’s GDP grew 6.Brazil GDP growth in Brazil in 2007 was the highest in Latin American countries.
particularly a lack of confidence on the part of foreign investors in Russia.5% from 8. 9. The impact of the crisis on most Russians has so far been minimal. indicating a downward revision of 30 tb/d from last month’s assessment. After many years of strengthening rouble have witnessed a slight weakening.78 mb/d. Russa’s GDP growth is expected to weaken appreciably. the effects of the global credit crunch are compounded by domestic factors. The downward revision was made to accommodate the adjustment to preliminary third-quarter production figures as well as minor revisions to the first and the second quarters.85 mb/d in 2008. Russia’s oil supply to decline in 2008…Russia’s oil production is now forecast to experience a minor decline of around 20 tb/d over the previous year to average 9.RUSSIA
Like other BRIC countries.5% in 1Q08.74 mb/d. Russia’s GDP moderated to 7. On a quarterly basis. The Russian stock exchange index RTS has fallen by around 50% from its peak in May 2008.84 mb/d in the third quarter. reaching the level of summer 2006. reflecting slowing world demand and tightening financial conditions. According to preliminary data. The fall in oil prices to close to US$50/barrel envisaged makes Russia reliant on other areas of the economy to sustain growth. Russian oil supply is seen averaging 9. and the central bank has had to intervene by buying the currency in order to prevent its excessive weakening against a currency basket made up of the US dollar and the Euro.84 mb/d and 10. But lack of diversification and weaknesses in the business environment mean there are few alternatives for Russia.03 mb/d respectively. Russia’s oil supply stood at 9. Russia is in the grips of global financial market turmoil. And it has not done much damage to the image of the country's popular but increasingly authoritarian government. partly because the crisis has received little attention in the largely state-linked mainstream media. For Russia.
. with many operators in Russia reporting losses due to the relatively high duties. In 2Q08. 9.
The economic cycle in
. as well as earlier government efforts to fight inflation and shore up the declining rupee.800. from above 20. The index broke down the long term trend channel and we are now in a correction period. The Indian financial sector is relatively insulated. RTS was testing its 1997 highs.
India has been hurt by the global financial crisis. the Bombay Stock Exchange fell almost 50 percent. however. and Indian banks did not have significant exposure to subprime loans in the United States. RSI was failing to make higher highs. 580 levels is an important long term support for the RTS index. The uptrend was followed by a correction after breaking down the trend channel.RTS INDEX RTS Index was trending up during the 1996-1997 period. Slower GDP growth…. In 2005. During the uptrend RSI signaled deceleration. There has also been an intense liquidity crisis in the Indian economy. The market made higher highs after 2006 and reached to 2500 levels but the speed was decelerating. The index moved from 72 levels to 570 levels. The uptrend was followed by a 2 year long consolidation period. From January 2008 to late October 2008. We will follow RSI to see the deceleration of the downtrend. During 2002-2003 period. but it may be better positioned for a quick recovery and for future growth than many of the other developing economies.000 to around 10. the RTS index broke above the 2 year long consolidation range at 750 levels and reached the upper boundary at 1. The stock market. has been badly hit as foreign institutional investors (FIIs) have sold almost US$10bln of their investments in Indian companies to cover losses accrued in their home markets. the rupee is not fully convertible. The market again made higher highs but the RSI failed to make higher highs. created by the tightening of global credit markets and the withdrawal of FIIs. The market made higher highs but the RSI failed to make higher highs.500.
SENSEX (INDIA) 1990-1992 was a strong period for the SENSEX. SENSEX broke above the upper boundary and started its strong uptrend.000. and more weakness is expected ahead in response to slowing demand from advanced economies and growing strains in regional financial markets.000 is strong support. or SARS. If the index holds above 8. growth in 2Q08 came down to 7. However. In March 2005. In India. after 1992 we saw a choppy sideways movement between 2. India's SENSEX index was testing 21.
.000 levels.500.5% in 1Q08. on the back of weakening investment. China's economic expansion was the weakest since at least the second quarter of 2003.1% in the 2Q08. while private consumption and export growth have held up well amid the global financial crisis. Annual gross domestic product growth slowed more sharply than expected to 9%from 10. 8. The consolidation range had a slightly positive slope. when growth slumped because of the severe acute respiratory syndrome. During 2002-2003 SENSEX tested the lower boundary of the consolidation range and rebounded from 2.500 and 6. epidemic.9% from 8.000 levels we can expect a rebound towards the moving averages at 12. The index tested the upper boundary of the consolidation range at 8.emerging Asia started to turn in early 2008. the index reached 7.800. In the beginning of 2008.000 and rebounded.800 levels. where the index moved from 700 to 3. The global sell-off and sharp corrections in the World markets pushed the SENSEX back to the previous consolidation range in 10 months. 20-50 and 100 week moving averages are signaling a bear market. The index moved in the wide range between 1992 and 2005. After a short pullback.000 levels
China’s economic growth rate slipped into single digits in the 3Q08 for the first time in at least four years under the impact of the global credit crisis and weakness in the domestic property sector.
SSE COMPOSITE INDEX CHINA The uptrend that started in 2006 pushed the index from 1.300-2. However. federal guarantees on new bank debt for three years and FDIC insurance for noninterest bearing accounts. Canada. The downtrend is continuing in a clear parallel trend channel.000 in two years. when SSE Composite broke down the two year long uptrend . government (as mirrored by the new revisions adopted by the U. then it could also end up making money. if the Treasury finds the right buyers for the banks that it partially owns. government. Treasury to buy troubled mortgages and mortgage-related securities. the U.S. the Bank of England pledged US$ 87 billion in direct support to the country’s major financial institutions. Following the bailout of Bear Sterns. During the strong uptrend. central banks around the world (Fed. the original package (US$ 700 billion) has been revised to include a recapitalization of banks. 2 In Europe. this could ultimately be a profitable transaction for the U. We will be following the upper boundary of the parallel trend channel and the moving average for a trend reversal.S. Since then the index has been in a downtrend and gave back almost all the gains of 2006 and 2007. ECB. Treasury). Sweden.500 levels to 6. The important resistances are at 2. every correction took place in the parallel trend channel and above the moving average.S.S. If the troubled assets (MBS) bought by the Treasury are later sold at a fair market value. And.S. The first trend reversal signal was generated at the beginning of 2008. Furthermore. government has spent (or committed) more than a trillion dollars in trying to prevent the collapse of U. AIG. and Fannie Mae.S. Congress approved the Emergency Economic Stabilization Act to give authority to the U. financial markets. British Prime Minister Gordon Brown’s rescue package which involves direct capitalization and guarantee of inter-bank lending has been adopted by other major European countries and the U.S. Freddie Mac.500 range. What is being done to solve the problem? 1 The U.
Russia leads in the production of natural gas as well. Russia The Russian economy is dominated by the energy sector: · Crude oil exports make up about 60% of Russian exports. Although the heavy dependency of Russia on oil and gas may at first sight be a source of concern. unforeseen income in US dollars for oil producers and for the Russian state since the end of the nineties.Switzerland. of world gas reserves. the public sector budget would slide into deficit only at oil prices of under 30 US dollars a barrel. each about 15%. More than a quarter of world natural gas reserves are located on Russian territory. WHY BRIC COUNTRIES PERFORM DIFFERENTLY The behavior of these countries are different with respect to changing conditions. It has reduced the repo rate by 50 basis points to 5% and cut the reverse repo rate by 50 basis points to 3. Only Qatar and Iran also have double-digit shares. placing it in ninth position amongst oil producing countries. Steadily rising prices for oil have generated substantial. Russia has a share of 5% in global oil reserves.2009 has announced the rate cut. the Russian economy is relatively well prepared for periods of declining oil prices.5% with immediate effect.A. · Russia’s share of global crude oil production in 2003 was some 11%. Since 1999. and China) introduced coordinated interest rate cuts to lower the cost of borrowing. followed closely by the U. public sector debt in Russia has been halved to around 35% of GDP. making the country the second largest oil producer in the world after Saudi Arabia. This has enabled Russia to make early repayments of government debt. The country’s foreign-exchange reserves are at a record level and form a cushion against possible external shocks. with the aim of restoring confidence in the global economy. According to initial budget plans. India
. S. 3 The Reserve Bank of India on March 04.
It is unusual for the export of services to play a major role in a developing country. In industry. Brazil What oil and gas is for Russia. Traditional goods also make up the bulk of Indian exports.For years. The dynamic growth of this sector is likely to continue. High oil prices thus do not have a negative effect on the country’s current account balance. the services sector has had a decisive impact on overall growth in the country in recent years. And even though their share of Brazilian exports is much lower today than it was ten years ago. that India has found a promising niche with its IT and call-centre services and that China is the most advanced of all in many industrial areas thanks to its international competitiveness. Brazil is much more than just a producer of raw materials. over 50% of the goods exported by Brazil. In greatly implified terms it can be concluded that Brazil stands for raw materials and agricultural produce. high prices for soya and iron ore are having a positive impact on the country’s trade balance. the textile sector dominates. however. In the export of these goods especially Brazil leads the world. Although the IT sector only accounted for 3% of Indian GDP in 2003. The agricultural sector accounts for about a quarter of economic output and twothirds of the workforce are employed in this sector. In 2004. But at least the country can meet its oil needs from its own production. The major role that agriculture still plays is also reflected in income levels in India. coffee and soya are for Brazil. The Indian economy continues to centre on traditional industries. Russia for oil and gas. In terms of per capita income. were manufactured products. However. and is a positive feature of India. The high level of Brazilian foreign debt (135% of exports) is still a problem and the relatively low savings rate as well as investment
. iron ore. India has attracted attention through the successful establishment there of English-speaking call centres and software companies. the biggest country in Latin America both in terms of area and economic power. Brazil also produces oil although its share of world reserves of 1% is minor compared to say Russia’s. India trails far behind the other BRIC countries.
High oil prices help large producers like Russia that rely on exports for fiscal revenue and foreign exchange. the price of oil is a key determinant of inflation.shortfalls in infrastructure are curbing growth. China There are frequent reports on the shift of production facilities from industrial countries to China. the cost of production. the trade balance and the strength of the currency. which is now largely self-sufficient and has insulated its economy from oil price shock on net basis. with a few exceptions. since 2003 current account surpluses have made it possible for Brazil to build up foreign exchange reserves. Whereas Brazil. Adjustments in the structure of government debt have lessened the vulnerability of the country to external shocks. Such sweeping reform processes take time and are subject to the risk of temporary setbacks. However. In spite of the lengthy phase of unusually high growth. With success: the share of manufactured goods in exports has now reached some 50%.
Volatile oil prices have varying impacts on the Bric’s economies. China is still in a transformation process. Since 1982. The start of the process of change in China is reflected in the growth of the economy. For the net oil-importing countries of China and India. evolving from a centrally-planned into a market economy. Like Russia. and growth should accelerate to nearly 4% in 2007. Since the end of the seventies. the government has been endeavouring to improve the country’s economic structures. Not only industrial countries dream of such continuously high growth. has grown year for year by over 7%. China also tops the growth rankings in direct comparisons with other developing countries. China is still far removed from the status of an industrial country. China‘s economy. Will the largest Asian country soon become the world’s most important production centre? Sweeping economic reforms have a long tradition in China.
Even if domestic currency
.In 2007. Russia’s economic growth over the past seven years has been driven primarily by energy exports.and gas-related activities. A surge in export revenues can lead to a surplus in a nation’s balance of payments. Oil exports have represented a greater share of gross domestic product (GDP) in Russia than Brazil. Foreign-exchange appreciation can have some unexpected spillover effects for other parts of the economy. Appreciation of domestic currency results in a loss of competitiveness in other economic sectors as imports become cheaper and exports more expensive.1%. given the increase in Russian oil production and relatively high world oil prices during the period. surpassing average growth rates in all other G-8 countries. and the hydrocarbon industry is one of the main drivers of the country's economy. Revenue from oil and gas extraction and export is a central component of the Russian government’s budget. Oil exports contribution to Russian GDP have increased from 15. as about 40% of the state budget comes from oil.8% of GDP in 2003 to 17. Russia’s real gross domestic product (GDP) grew by about 8. it is observed that oil-exporting economies have experienced difficulty in converting oil revenues into a continuous source of financing for economic growth and development. and marking the country’s seventh consecutive year of economic expansion. One of the major drawbacks for oil export dependent economies is that they can be hurt by the impact of volatile oil export revenues on the exchange rate. Russian government is keenly interested in increasing both production and exports in order to maximise revenue and keep the economy growing steadily. While Russia might expect their large oil reserves to pave the way for economic development.5% of GDP in 2007. Russian government’s central aim is to maximise revenue from the oil and gas sectors. China and India over past 5 years. which results in a stronger domestic currency.
Russia is the oil producing country.China is increasingly playing the role of a high developed workbench for industrial countries
. Brazil raw material and agricultural produce. 2. High prices of oil favorably affect the country. 3.depreciates. local manufacturers of tradable goods who were disadvantaged when the currency was strong may still be unable to fully capitalise on the improved exchange-rate environment if the volatility in the currency discourages investment in other industries.India it is IT services and for the large domestic consumer market size 4.
POSITIVE CORRELATION : There exist a positive correlation between the
equity market of all BRIC COUNTRIES.CONCLUSION 1. It means there are some common factors
HIGH CONSUMPTION: . AFFECT OF OIL PRICES ON BRIC COUNTRIES
. private investment) technologies which comes with FDI and skilled labor who migrate to countries which have political stability.
2. Following are the factors that could be the reasons for the positive correlation of EQUITY MARKET OF BRIC COUNTRIES
LARGE POPULATION :.Bric countries represent 40% of word's population so they have high domestic consumption capacity because of that these countries are still doing well in the period of recession.Political stability determines the factors which determine economic growth such as investments (foreign direct investment (FDI). the BRIC nations will be a significant consumer of goods and services. In Russia its 71. China is First. Growing consumer spending in BRIC Countries also help them to face the financial crisis.2% and in Brazil its 66.The BRIC nations represent over 40% of the world’s population and occupy over a quarter of the world’s land area. As the emerging middle class continues to develop.8. Bric countries have relative political stability. So political stability indirectly determines economic growth. stock market capitalization.
• PREFERABLE DEMOGRAPHICAL PROFILE
:.which affects these countries.5. Brazil on fifth.5 . In China the percentage of young population is 71. India is second.
RELATIVE POLITICAL STABILITY: . and Russia is on ninth position in population.BRIC Countries
provide preferable demography profile to the investors. In India percentage of young population is 63.
Russia is an oil producing country so it affects favorability with high rate of oil prices. INDIA AND CHINA . FINANCIAL CRISIS ON EQUITY MARKET OF BRIC COUNTRIES
.The correlation between Oil price and BRIC countries is positive but in case of China which shows it is not a oil producing country. is now largely self-sufficient and has insulated its economy from oil price shock on net basis. Volatile oil prices have varying impacts on the BRIC’s economies. The same reasons exist for the correlation of GOLD PRICE and Equity Market of BRIC COUNTRIES .
3.The same thesis hold true for China but probably to a lesser extent because China story is of high manufacturing and export story but India story is primarily of high domestic consumption story . AFFCT OF U. the cost of production. For the net oil-importing countries of China and India.Brazil and Russia are having different story so they are favorably affected by oil prices and have different pattern. the trade balance and the strength of the currency. So the factors which has lead high oil price in oil during 2005 to 2008 are also the factors which has lead rise in the Equity of BRIC Countries. Brazil.-India is net importer of oil so high prices of oil also adversely affect the Indian Economy but high oil prices could also be result of an overall bullish sentiments of FII's about the word economy. High oil prices help large producers like Russia that rely on exports for fiscal revenue and foreign exchange.S. the price of oil is a key determinant of inflation. BRAZIL AND RUSSIA: .
India's services sector.The present FINANCIAL CRISIS has adversely affected all the Equity Markets of the World including BRIC Equity Market also. This may be due to the fact that as the economy went into recessionary mode there is a high risk aversion on the parts of the global factors and FII's. China SSE Composite broke down the two year long uptrend. The sector has thrived on outsourcing from the developed world. We all know that equity is high risk high return asset class and as in the bullish period it attracts more capital flow similarly in bearish period there is a phenomenon of capital flight during risk time the global investor would prefer to take whatever profit these emerging markets are offer and would park the same money in more secure asset class like various debt based instrument. CHINA AND BRAZIL:-China and Brazil will see weaker demand from the USA and Europe for their exports. from above 20. Global Economy is now days too much interlinked even in decline these countries show positive correlation.500. suffered. The financial crisis has triggered downwards revisions in economic growth in Brazil for 2009 RUSSIA AND INDIA :. oriented towards developed economies. India's economy depends on the services sector. India's services sector.
. From January 2008 to late October 2008. Russia is considered more risky by foreign investors. accounting for more than half of GDP. oriented towards developed economies. BRIC economies are feeling the consequences. Additionally. As the global economy has set to slow in 2009.000 to around 10. accounting for half of export revenues in 2007. Russia is heavily reliant on hydrocarbon exports. the Bombay Stock Exchange fell almost 50 percent. Oil prices fell from US$147 per barrel in July 2008 to below US$70 in October 2008 amid the global economic slowdown. as its economy is the least diversified.Russia is probably the most vulnerable of the BRIC countries.
BRIC have large trade surpluses and foreign exchange reserves that make them more resilient to the crisis. unlike other emerging economies. When the markets will recover these are more likely to be chosen.
LIMITATIONS AND SUGGESTIONS The present study has been carried out with the following limitations:
.1. 3. The better results could be achieved to study the monthly average values of the
stock and it will give more reliable results. The analysis of Multiple variable is
not analysed. Different people may interpret the same analysis in different ways. Due to only use of secondary data for the analysis there can be various errors while using the information provided by secondary sources. 2. The analyst has to make interpretation and draw his conclusions. Factor analysis and other statistical measures can be used for better results. Combined correlation is not calculated. The country correlation is calculated on the basis of stock values at the end of six month period from 2004 to 2009. 4.
5. Analysis is only a mean and not an end in itself.
1-4.nseindia.N PATRI. QUNTITAVE TECHNIQUES (2007)
Pg. DIGAMBAR PATRI .com 2.google.20
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