In a study
we observe that the positive growth effect on the real sector is reaped out
from the financial integration in terms of integration of the financial markets
(stock markets) among the BRICS nations. The fundamentals of the economies in
the sample are attracting the foreign investment from among the nations in
sample. Financial integration allows the capital to be invested in the market
which is to give the highest return by reducing the barriers, hence the
investors have the incentive to invest and consequently the entrepreneurs also
gets the incentive in investing technological innovation. The ever expanding
cross country capital flow in equity market is improving the production
structure of the economies and influencing the growth of the real sector
positively. Factors that fosters the investing in BRICS nations is the low
degree of macro-economic volatility relative to the rest of the world. The
growth rate of Brazil, China, South Africa and India is quiet high relative to
the global market growth rate, especially aftermath of the crisis of 2008.
www.glarius.com – has 25 years of market data with analysis, prognosis.
The global
financial market has become very synthetic in terms of volatility. The member
nations of BRICS nation have much more transparency of information and less
asymmetry of information about the economy fundamentals and with regard to
projects they are investing, since the financial intermediaries have easy
access to all kind of information regarding the projects and economy
fundamentals. So to reduce the uncertainties of investment the investors of
BRICS nation are opting for cross-country investment within and between the
BRICS nation. The positive impact of economic growth is found from the
analysis, implies that the fundamental endowment of the BRICS nations are
almost equal therefore, consequently the growth is taking place in terms of
equalization of factor prices.
Daily changes, 10-year and
25-year averages of the main stock market indices like JSE/FTSE, IBOVESPA, BSE
Sensex, RTSi can be followed on www.glarius.com
Mr. Panchanan Das
Professor of Economics, University of Kolkata
Kolkata, West Bengal, India
