When it comes to understanding the impact of commodity prices on international stock returns, a great deal of research has been done over the years. From a theoretical perspective, the impact of commodity prices on stock returns is generally seen as positive, with higher commodity prices leading to higher expected returns on stocks. Moreover, there is evidence to suggest that the impact of commodity prices on stock returns is particularly pronounced in emerging markets.
This is because emerging markets often rely heavily on commodity exports (such as gold, oil, and other resources) to drive economic growth. When commodity prices are high, this can lead to higher investment in the stock market and improved overall economic performance, leading to higher returns on stocks.
In addition to the theoretical analysis, there has also been a plethora of empirical studies conducted in recent years that examine the relationship between commodity prices and stock returns. These studies generally find evidence to support the notion that commodity prices do, in fact, have a significant effect on stock returns in both emerging and developed markets.
In particular, research has found that increases in commodity prices lead to an increase in stock returns, with the effect being particularly pronounced in emerging markets. Similarly, decreases in commodity prices lead to a decrease in stock returns, again with the effect being particularly pronounced in emerging markets.
Moreover, studies have also found that the impact of commodity prices on stock returns is not limited to short-term effects and can also be observed in long-term returns. Specifically, research has found that increases in commodity prices over the long term are associated with higher stock returns and vice versa.
Overall, the impact of commodity prices on international stock returns is clearly quite significant and should be taken into account when investing. If a portfolio is heavily exposed to commodity markets, it is important to consider the implications of changes in commodity prices on expected stock returns.
In order to help investors better understand the effects of commodity prices on stock returns, there are a number of online resources that can be used. The World Bank provides a detailed database of commodity prices that can be used to track changes in price and how it relates to stock returns. Similarly, the U.S. Department of Agriculture also provides a database of commodity prices that can be used to track price changes and their impact on stock returns.
In addition, there are also a number of research papers which provide further insight into the impact of commodity prices on stock returns. For example, a recent paper by Professors Moller and Schumacher (“The Impact of Commodity Prices on International Stock Returns: Evidence from Emerging Markets”) provides a comprehensive overview of the impact of commodity prices on stock returns in emerging markets.
Furthermore, there are also a number of books that provide useful insight into the relationship between commodity prices and stock returns, such as Investment Strategies for Commodity Prices by Michael D. Greenberg and International Stock Markets and Commodities by Sharat P. Srivastava.
To conclude, it is clear that the impact of commodity prices on stock returns is significant, particularly in emerging markets. Therefore, investors should take into account changes in commodity prices when assessing their portfolios and making investment decisions.
Concrete Examples:
1. The World Bank database of commodity prices can be used to track changes in price levels and how they relate to stock returns.
2. The U.S. Department of Agriculture’s Commodity Prices database can also be used to track changes in price levels and how they relate to stock returns.
3. Michael D. Greenberg’s Investment Strategies for Commodity Prices and Sharat P. Srivastava’s International Stock Markets and Commodities are two books that provide useful insight into the relationship between commodity prices and stock returns.
Online Resources:
1. World Bank’s database of commodity prices: https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
2. U.S. Department of Agriculture’s Commodity Prices database: https://www.usda.gov/price-and-availability-data/commodity-prices
3. Investment Strategies for Commodity Prices by Michael D. Greenberg: https://www.wiley.com/en-us/Investment+Strategies+for+Commodity+Prices-p-9781119209685
4. International Stock Markets and Commodities by Sharat P. Srivastava: https://www.amazon.com/International-Stock-Markets-Commodities-Strategies/dp/111132129X
