INTERNATIONAL INVESTING PROJECT
This project allows you to learn more about international investing and about companies that compete in the global arena. You need to create a stock portfolio of at least two Australian multinational corporations and two foreign stocks. You will monitor the performance of your portfolio over the school term and ultimately will attempt to explain why your portfolio performed well or poorly relative to the portfolios created by other students in your class. The explanations will offer insight into what is driving the valuations of the Australia-based MNCs and the foreign stocks over time. Select two stocks of Australia-based MNCs that you want to include in your portfolio. If you want to review a list of possible stocks or do not know the ticker symbol of the stocks you want to invest in, go to the website https://au.finance.yahoo.com/. Make sure that your companies conduct a substantial amount of international business.Next, select two foreign stocks that are traded on the Australian Securities Exchange (ASX) and are not from the same foreign country. Many foreign stocks are traded on the ASX; go to the website http://www.asx.com.au/products/foreign-entity-data.htm to get the Foreign Exempt and Foreign Domicile companies listed on the ASX. You should select the ASX code of the foreign company; for example, AIZ is the ASX code for Air New Zealand. You can use this ASX code to review the company’s background information, including a description of its business and its stock price trend over the last year. It is assumed that you will invest A$10,000 in each stock that you purchase. Your purchase price should be the closing price of the stocks you have chosen as at 17th November 2017.
List your portfolio in the following format:
You can easily monitor your portfolio using various Internet tools. If you do not already use a specific website for this purpose, go to https://au.finance.yahoo.com/. Follow the instructions, and in a few minutes you can create your own portfolio tracking system. This system not only updates the values of your stocks but also provides charts, recent news, and other information on the stocks in your portfolio.
At the end of each week (end Friday) during the trimester, you should evaluate the performance and behaviour of your stocks. You are required to record the prices of the stock as at closing on Friday each week up to week 10 of the class. For example, your first week closing price should be taken after the stock market closed on Friday, 24th November 2017 (end of week 3). Your final week of recording will be the Friday of week 10. Weekly stock price changes during the Mid-Term Break should also be recorded.
1) a. Determine the percentage increase or decrease in each of your stocks over the period of your investment and report that percentage in a table like the one below for each week. In addition, offer the primary reason for this change in the stock price based on news about that stock or your own intuition. To review the recent news about each of your stocks, click on https://au.finance.yahoo.com/ and insert the ticker symbol for each company. Recent news is
provided at the bottom of the screen.
b. How does your portfolio’s performance compare to the portfolios of some other students? Bring your weekly records to class for discussion. Why do you think your performance was relatively high or low compared to other students’ performances? Was it because of the markets where your companies do their business or because of company-specific conditions? Shar
2) Determine whether the performance of each of your Australia-based MNCs is driven by the Australian market. Go to the site https://au.finance.yahoo.com/ and insert the symbol for your stock. Once the quote is provided, click on Interactive Chart. Then, click on Compare and type ^AXJO (ASX 200) to assess the relationship between the Australian market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by Australian market conditions. Repeat this task for each Australia based MNC in which you invested.
3) a. Determine whether the performance of each of your foreign stocks is driven by the corresponding market where the company is based. First, go to the site https://au.finance.yahoo.com/world- indices and look up the symbol for the country index of concern. For example, Shanghai Composite’s index is 000001.SS. Next, go to https://au.finance.yahoo.com/ and insert the symbol for your stock. Click on Interactive Chart. Then, click on Compare and type the symbol for your index to assess the relationship between the market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by local market conditions. Repeat this exercise for each foreign stock in which you invested.
b. Determine whether your foreign stock prices are highly correlated. Repeat the process just described, except insert the symbol representing one of the foreign stocks you own in the box below the chart.
c. Determine whether your foreign stock’s performance is driven by the Australian market (using the S&P/ASX 200 as a market proxy). Erase the symbol you typed into the box below the chart, and click on S&P just to the right.
4) a. Review annual reports and news about each of your Australia-based MNCs to determine where they do most of their business and the foreign currency to which they are most exposed. Determine whether your Australia-based MNC’s stock performance is influenced by the exchange rate movements of the foreign currency (against the Australian dollar) to which it is most exposed.
Go to http://www.oanda.com and click on Historical Exchange Rates. You can convert the foreign currency to which the MNC is most exposed into Australian dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found.
b. Repeat the steps in (4a) for each Australia-based MNC in which you invested.
5) a. Determine whether the stock performance of each of your foreign companies is influenced by the exchange rate movements of the company’s local currency against the Australian dollar (you can obtain this information from http://www.oanda.com). You can convert the foreign currency of concern to Australian dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment
period. Attempt to explain the relationship that you just found.
b. Repeat the steps in (5a) for each of the foreign stocks in which you invested.at
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