HA1022 Principles of Financial Markets T1...

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HA1022 Principles of Financial Markets T1 2012
______________________________________________________________________________________________________
HOLMES INSTITUTE
FACULTY OF
HIGHER EDUCATION
HA1022 Principles of Financial Markets
Trimester 1 / 2012
ASSESSMENT CASE STUDY
Work must be carried out in groups of 4 people.
The objective of this assignment is to assess the investment conditions in the Australian economy form Top
Down Fundamental Analysis.
Students should proceed to the Reserve Bank Website:
http://www.rba.gov.au/chart-pack/
From here you can down load graphs of key economic indicators. Then using these graphs analyse the recent
history of the Australian stock market and form a prediction as to the investment conditions in the current
Australian stock market.
The indicators must include the following:
World Economy
o GDP Growth World
Australian GDP Growth and Inflation
o Australian GDP Growth
o Consumer Price Inflation
Interest Rates
o Australian Bond Yields
Exchange Rates, Australian Dollar vs:
o US Dollar, Euro and Yen
You should be looking at these indicators and comparing them to what happened to the stock market shortly
after. In your analysis include a definition and/or background information on each indicator that you are
analysing.
At the end of your report state your conclusion as to whether or not your analysis shows that current
investment conditions in the Australian stock market are favourable.
Group Report Required:
Each group should prepare a report of no more than 10 pages outlining the above analysis and the selection of
the resulting portfolio. Marks will be given for content not for length. Anything over 10 pages will not be
marked.
Resources available
You should use the RBA website; this will give you easy access to graphs and reports on the Australian and
world economies. You may also access additional information via the ‘Australian Financial Review’ newspaper
or website, finance.yahoo.com; finance.google.com; Bloomberg.com; ft.com, www.asx.com.au,
www.afr.com.au.
HA1022 Assessment Case Study Trimester 1 2012
Undergraduate Program HA1022 Principles of Financial Markets
2
Notes:
1. Marks will be rewarded for in-depth analysis.
2. A good place to start would be re-reading Principals 4 investing in equity and chapter 7 of the
textbook.
3. Write all group members names on the report.
4. All groups must submit their report via safe assign; only one submission per group is required.
5. The report is due on Friday 5pm week 10.
6. When writing the report, imagine that your audience are people that know nothing about finance or
the financial markets. At each stage you will need to carefully explain what do are analysing and why.
Do not think that just because your lecturer will know what this indicator means that you do not have
to define it.
Please be aware of PLAGERISM and COPYRIGHT rules.
Do NOT just include in your report pages of printouts from the RBA website or you will receive
ZERO marks.
You must reference, see the guide in the Additional Readings folder on Blackboard.
Assignment Marking Guide
Introduction
Introduction (1 mark)
Overview of the Australian economy (1 mark)
Fundamental Analysis
Top down analysis
o Data gathering and presentation (6 marks)
o Analysis (10 marks)
Conclusion
Is the Australian share market good to invest in currently?
Why; this must be related back to the analysis and explanation! (2 marks)
Notes:
60% of the marks come from the analysis that the group must perform. If there is just
secondary data in graphs, the assignment can only achieve 30% at most.
The assignment needs to read as if it is one person’s work. Marks will be deducted if the
assignment is not coherent.
Even though there are not marks allocated for references; not including any will result in a
mark of zero.

005_ybyn8jk-wzhqrojf.pdf

Robert · Accepted Answer

Australian Stock Market                                                                                                       1
Australian Stock Market
Australian Stock Market                                                                                                       2
Introduction: 
Investment is one of the most important aspect that is needed which helps in fulfilling 
different future needs of the investor. There are different assets in which an investor can invest 
so as to have a future benefits from the required investment. Every investment entails an amount 
of some risk which is associated. Investment helps in promising the return of the original amount 
along with an adequate return. So, investment is very important as it helps in fulfilling different 
future needs of the investor.  
For investing in stocks or in a particular country, it is very important to analyze the 
economy and the market of the particular country. 
Investment is called as ‘the current commitment of dollars for a period of time in order to 
derive future payments that will compensate the investor for (1) the time the funds are 
committed, (2) the expected rate of inflation, and (3) the uncertainty of the future payments’ 
(Frank Reliey). An investor can be said a person who is making an investment an investor can be 
an individual, a government body, or a corporation. Investments can be done in different stocks, 
commodities, bonds, or real estate. The investor focuses on trading the known amount of dollar 
in the current date with an anticipation of a getting  a future benefit in the future.  
To design the investment portfolio of it is important to analyze different aspects which 
are the time for which the funds are being committed for the future needs, the expected rate of 
inflation and the expected payment that is likely to receive in the future.  
In this paper we will focus on analyzing the economy of Australian market which will 
help in bringing out the investment opportunities in the Australian market.
World Economy: 
Australian Stock Market                                                                                                       3
In 2009, the world had undergone major financial crisis which has affected the stock 
market and the economy of the whole world. After the financial crisis, the economy was able to 
recover, The GDP of the world reached the all-time high in last ten years but have decreased 
incredibly after that.  The global economy is expected to 3% per year, the projected growth for 
2012 is 3.5% which is going to increase to 3.6% from 2013 to 2016, which may further decrease 
to 2.7% from 2017 to 2025. The different economies across the worlds will witness different 
growth, the emerging economies are expected to have a growth rate of 5.6% in 2012 and 3.3% 
from 2012-2017. There are different challenges that are faced by the world which includes 
increase in productivity, increasing unemployment, because of which the GDP of the world is 
deteriorating.
Australian Economy: 
The economy of Australia is considered as the advanced economy which is highly 
dominated by the service sector which represents about 68% of the total GDP of the country. The 
economy of Australia has grown dramatically from last 17 years before the global financial 
crisis. With the economic crisis that hit the world, slowed down the economic growth of the 
Australian Stock Market                                                                                                       4
country and Australia had witnessed a quarter of the negative growth in the GDP. In 2009, the 
economy grew by 1.3% which increased to 2.7% in 2010 and 3% in 2011. The unemployment of 
the company also fell to 5% in 2011 as compared to 9% in 2009. 
This is the sign that the Australian economy has improved dramatically. As per 2011, the 
GDP in terms of purchasing power parity was recorded at $917.7 million and $1.507 trillion in 
official exchange rate terms. And the per capita GDP as per 2011 report is considered to be 
$40800. Considering the inflation and GDP of the company we can see that the GDP and 
inflation of the country is at a deteriorating rate. The average inflation of Australia is considered 
to be 6.02%, the recent inflation rate is 1.6% in quarter 1 of 2012. The CPI rose 1.

HA1022 Principles of Financial Markets T1 2012 ______________________________________________________________________________________________________ HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION...

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