Investment vs. Share Market Profitability
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The article analyses the relation between investments and share market profitability. The research covered the investment effect in the USA and other countries. It measured the monetary policy influence on stock market index Standard & Poors' return rate. The research included also the degree of economy globalisation in a given country to explain the mechanism combining market share values and future investment tendencies in the mature and emerging economies. The researchers compared direct and indirect investment effect in chosen countries. The research proves that FED expansive monetary policy in a year T positively influences and the restrictive one negatively influences share market in the same year. The expansive policy leads also to the much higher investments next year than the restrictive one. Between the stock market index rate in a given year and real investment changes in the next year there is a positive correlation. The value of this relation reflects the strength of investment effect. Its importance describes the indicator measuring the relation between emission revenues and investment expenditure. The characteristic feature of emerging markets is that their share markets predict especially future domestic investment activities. Share market is more effective as a transmission channel than traditional rate. It is visible in all the mature markets. The investment effect can be observed also in the relation between stock exchange index and accompanying changes of business optimism.
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