This article aims to examine the long-run equilibrium relationship between bilateral trade
linkages and stock market correlations of Australia and China using quarterly data from 1993
to 2015. Further, this study explores the impact of trade intensity on stock market correlations
using OLS, Dynamic OLS (DOLS) and Fully Modified OLS (FMOLS) models. The empirical results
confirm that there is a significant long-run relationship among the variables. In addition, our
results, based on OLS, DOLS and FMOLS, show that increasing trade intensity between Australia
and China has a significant and positive impact on their stock market correlations. The Global
Financial Crisis also contributed for their stock market interdependence. Our results therefore
suggest that the bilateral trade relations between Australia and China have brought their stock
markets together over time. The findings of this study offer significant policy and practical
implications. The policymakers need to be aware of the economic changes in those countries
as they will immediately reflect on their stock market performance and relationship. Similarly, the
global investors need to be aware of the fact that the diversification opportunities between
Australia and China have considerably declined over time as their markets became more interdependent
in the recent past.
Zakari, A. (2019). The dynamic impact of bilateral trade linkages on stock market correlations of Australia and China. Afribary. Retrieved from https://track.afribary.com/works/the-dynamic-impact-of-bilateral-trade-linkages-on-stock-market-correlations-of-australia-and-china
Zakari, Abdulrasheed "The dynamic impact of bilateral trade linkages on stock market correlations of Australia and China" Afribary. Afribary, 11 Oct. 2019, https://track.afribary.com/works/the-dynamic-impact-of-bilateral-trade-linkages-on-stock-market-correlations-of-australia-and-china. Accessed 24 Nov. 2024.
Zakari, Abdulrasheed . "The dynamic impact of bilateral trade linkages on stock market correlations of Australia and China". Afribary, Afribary, 11 Oct. 2019. Web. 24 Nov. 2024. < https://track.afribary.com/works/the-dynamic-impact-of-bilateral-trade-linkages-on-stock-market-correlations-of-australia-and-china >.
Zakari, Abdulrasheed . "The dynamic impact of bilateral trade linkages on stock market correlations of Australia and China" Afribary (2019). Accessed November 24, 2024. https://track.afribary.com/works/the-dynamic-impact-of-bilateral-trade-linkages-on-stock-market-correlations-of-australia-and-china