Tag: Research

Lessons from the Global Financial Crisis

The worldwide financial markets and the global economy have suffered from a financial crisis on a scale not experienced since the 1930s. But the crisis now appears to be over. Credit spreads have returned to more normal levels, activity in credit markets has recovered strongly, and the volatility of day-to-day movements in share prices has declined. Moreover, the recovery of the global economy, of which the U.S. is such an important part, now appears strong enough to suggest that the recession of 2008-9 may turn out to have been a mild one of short duration. The IMF is forecasting global growth of 4% in 2011 after recording a marginal decline of about 1% in 2009, and thus the global financial crisis does not appear to have led to an economic crisis.

Click to read the full article: Lessons from the Global Financial Crisis (Or Why Capital Structure Is Too Important to Be Left to Regulation)

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The global forces that drive SA’s Financial markets from day to day

This study demonstrates with the aid of single equation regression analysis the role global capital markets play in determining the behaviour of the Johannesburg Stock Exchange(JSE ALSI) the Rand/ US dollar exchange rate (ZAR) and long term interest rates in South Africa on a daily basis represented by the All Bond Index (ALBI) or long term government bond yields represented by the R157. It will be shown that since 2005 the state of global equity markets, represented in the study bythe MSCI Emerging Market Index (EM) has had a very powerful influence on the JSE. The EM Index is shown to have had a less powerful yet statistically significant influence on the ZAR while it is also demonstrated and that conditions in global capital markets, and the ZAR have had some weak but statistically significant influence on the direction of long term interest rates in South Africa. It will be demonstrated that movements in  policy influenced short term interest rates, have had very little predictable influence on share prices, the ZAR or long termbond yields. The causes as well as the consequences of the ineffectiveness of policy determined interest rates for monetarypolicy are further analysed.