Sunday 30 April 2017

Macrostructure For The Capital Market








Capital markets have a big role for the economy of a country because it has two functions at once, namely economic functions and financial functions. It is said to have an economic function because the capital market provides facilities and facilities that bring together two interests ie those who have excess funds (investors) and parties that require funds (issuer). With the capital market, the party with the excess funds can invest the fund in the hope of obtaining rewards in the form of dividends or capital gains, while the company (issuer) can utilize these funds for investment without having to wait for the availability of funds from the operations of the company. The capital market is said to have a financial function because the capital market provides the possibility and opportunity to obtain return for the owner of the fund, in accordance with the characteristics of the selected investment.
In macrostructure, the capital market is heavily influenced by how the government policy is both fiscal and monetary. Conditions that occurred in 2009 is a significant global economic downturn that causes the volume of world trade to contract. After experiencing an average expansion of 8.1 percent over the past five years, in 2008 the growth in world trade volume declined sharply to 4.1 percent. Indications of a decline in world trade volume are reflected in a sharp decline in the Baltic Dry Index which is a barometer of world trade volume.
For a country, the immediate negative impact is the decline or slowdown in trade and investment growth. Transmission of the impact of the global economic crisis to the economy of the country entered through two channels, namely the financial channel and trade channel. The impact of the crisis through financial channels can occur directly or indirectly. Direct impacts occur when a bank or financial institution buys the toxic assets of a issuing company experiencing liquidity difficulties abroad. Another impact is the withdrawal of funds from a country by foreign investors experiencing liquidity difficulties (deleveraging). In addition, it can also occur through the action of moving a portfolio of high-risk investments into a lower risk (flight to quality). While indirect impacts of the financial pathway occur through the emergence of constraints to the availability of economic financing. Impacts through trade channels arise through the weakening performance of imported exports which in turn affect the real sector and potentially bring credit risks to banks. It also has the potential to put pressure on the balance of payments.
The high interest rates of the central bank affect the low liquidity. Thus it can be said that the role of macrostructure has a very big influence on trading liquidity in a country's capital market.

PROTECTION POLICY
International trade policy is any action of the government or the State, either directly or indirectly to influence the composition, direction, and forms of foreign trade or trading activities. The policy in question can be tariff, dumping, quotas, import restrictions, and various other policies. When compared with the implementation of domestic trade, the international ban is complex and complex.
The complications of international trade are due to the following:

  1. Purchases and sellers are separated by state boundaries.
  2. Goods must be shipped and transported from country to country.
  3. Differences between one country to another in either, language, currency, estimate or scales, law in trade and so on
  4. Different natural resources.

Government protection policies to protect the growing domestic industry (infant industry), and protect new companies from arbitrary large companies with the advantages that they have, other than competition of imported goods.
The purpose of protection policy is:

  1. Maximize domestic production
  2. Expanding employment
  3. Nurturing traditional
  4. Avoiding the risk that may arise if only rely on one commodity mainstay
  5. Maintain national stability, and not rely on other countries. In other words it reduces the percentage of dependence with other countries.

Thank you (^_^)

Saturday 11 March 2017

Danger Of Weakening Crude Oil Prices For The Global Economy



Crude Oil Prices Today
Source: Sindonews.com (March 1, 2017).
NEW YORK – Crude oil prices slipped, though trading was still above the level of USD50 per barrel as concerns about rising oil supplies United States (US) continues to overshadow the efforts of OPEC to cut production. US crude stocks has seen for seven weeks in a row.
As reported by Reuters on Wednesday (01/03/2017) expected weekly US oil inventories will increase 3.1 million barrels, for triggering fears that growth in demand may not be sufficient to absorb the crude oil to create a flood of global supply. These conditions led to pressure on world oil prices.
Listed price of US crude oil futures West Texas Intermediate (WTI) declined by 4 cents or the equivalent of 0.1% in the level of USD54,01 per barrel, while Brent crude fell to 34 cents or 0.6% to a level of USD55,59 per barrel. During this month Brent little changed, where WTI print monthly profit just above 2%.
While the price of gasoline futures shrank 1.35% at USD1.5120 per gallon, which is believed also burdened oil supply. Gasoline is under pressure in recent trading, where the stock is abundant. Organization of Petroleum Exporting Countries World (OPEC) has so far been showing compliance with production cuts at the start since the beginning of the year.
“Without full compliance from OPEC and non-OPEC producers as well as a marked improvement in demand makes it is still possible to be corrected. There is a risk it all to weakening,” said Tradition Energy Research Manager Gene McGillian.
A total of 11 non-OPEC oil producers have pledged to cut production. Russia claimed to be able to reduce production reached 124,000 barrels per day this month. On the other side analysts and economists expect the price of Brent in 2017 will be in the range of USD57.52 a barrel.

The Consequences That Would Arise
US Dollar is the currency in international transactions, so that for every purchase and sale at the international level will use USD. So as the strengthening of the USD, the USD will be able to buy more barrels of oil per dollar. So if previous oil price was 54 USD / barrel, with a stronger dollar, then by 54 USD will be able to buy more barrels of oil or illustrated price to 50 USD / barrel. So the price of a barrel of oil will decline as the dollar strengthened.
In other words, if the oil price goes down then the dollar will strengthen. That is why despite OPEC cut production but the USA still aggressively increase its oil production. It is an effort to ensure oil prices remain low seen from the increased output. Because if output increases the need for the USD will be high to buy oil and it made USD strengthens, or the price of oil to be down.
USA affected significantly by 15 countries, some of which have a strong influence and some have a weak influence but 15 countries are significantly affect the economic condition USA. Efforts to strengthen the value of the USD as an effort to increase the value of spending (export and import) for the development of infrastructure there.

But the problem is if the value of a strong USD which means another currency to be weak and it is not good for the economy of other countries because the value of spending in the country to be down, it resulted in the weakening of economic growth. Of course the 15 countries will be affected first by my analysis.

If the above measures are less effective it will be supported by other measures is the Fed will raise interest rates to reduce the money supply which will also increase the value of the USD.
Then what can be done by the 15th of this country? if there are export and import mean there are quotas and duties (taxes).
the economists must know what I mean.

Thank’s