Skip to content
Finance Investment, International News

Paper reveals how much influence global powers have on the economy

Charles Darwin University 2 mins read

Do the United States and China truly shape the global economic agenda? A new study investigating the relationship between global powers and the stock market has revealed they have more economic influence than previously thought. 

The study by Charles Darwin University (CDU) and Griffith University revealed how rich and powerful nations influence the policies of less powerful economies by exploring the correlation between the Global Power Index (GPI) and relative stock market performance and integration.  

This study is the first of its kind to establish such a relationship. 

The authors examined economic and stock market data over 25 years for 11 nations: Australia, Canada, China, Germany, France, India, Italy, Korea, Mexico, the United Kingdom and the United States. 

These regions represent 58.05 per cent of the gross domestic product of global markets and 46.17 per cent of the global population.

Lead author and CDU Associate Professor of Accounting and Finance Rakesh Gupta said the results showed the Australia and United States stock market changes with respect to other markets were more stable, whereas the India and China’s stock market changes with respect to other markets were more volatile. 

“The findings of the study are significant for investors who seek to benefit from investing in international investments,” Dr Gupta said.

“If a portfolio manager from a market with strong global power seeks international diversification benefits is less likely to benefit from diversifying into markets that have stronger and increasing global power. They will need to invest in markets with weaker and declining global power.” 

The study also found education and environmental awareness are likely to impact the stock market. 

“Findings suggests that more environmentally aware investors cause stock markets to deviate from each other,” Dr Gupta said.

“Similarly, higher level of education impacts negatively on the convergence of the stock markets. This can also be interpreted as environmentally aware investors and more educated investors look at domestic markets more favourably and as such cause investors to invest locally.”

Dr Gupta said based on the study’s findings, Australia should continue aligning itself economically with major powers such as the United States.

“When we consider Australia, it is developed but not powerful from a global perspective and as such it may not have impact on global markets,” Dr Gupta said.

“Whereas China which is developing economy but powerful and may influence more. This has implications for Australian investors who seek to invest in overseas markets. To gain benefits of diversification investors need to consider investments in markets that have lesser global power. 

“From an economic perspective Australia’s alignment with strong global power, such as the USA may be implicitly a good and strategic decision in terms of influencing global economic policy. Australia may continue to benefit from its alignment with China as well because of its rising global power.”

Global power and Stock market co-movements: A study of G20 markets was published in the Global Finance Journal


Contact details:

Raphaella Saroukos she/her
Research Communications Officer
Marketing, Media & Communications
Larrakia Country
T: +61 8 8946 6721
E: media@cdu.edu.au
W: cdu.edu.au

More from this category

  • Finance Investment
  • 14/02/2025
  • 09:41
Jacobi

FE Investments selects technology vendor Jacobi to accelerate growth of its Managed Portfolio Service (MPS)

BRISBANE, Australia, Feb. 13, 2025 (GLOBE NEWSWIRE) --  FE Investments (FEI) has selected technology vendor Jacobi Strategies (Jacobi) to enhance the discretionary fund manager’s model portfolio capabilities. Jacobi’s institutional-grade investment technology will be used to amplify and industrialise FEIs’ model portfolio risk monitoring, forward-looking analytics and model portfolio design processes.As part of their usage of Jacobi, FEI will integrate a range of proprietary models, tools and processes into their own private version of the software.As one of the top 10 MPS managers by assets, FEI will also strengthen their model portfolio reporting and engagement capabilities, reinforcing their commitment to best-in-class client service.Rob…

  • Finance Investment
  • 13/02/2025
  • 23:40
Bitget Limited

Bitget’s Protection Fund Average Hits $648M in January 2025

VICTORIA, Seychelles, Feb. 13, 2025 (GLOBE NEWSWIRE) -- Bitget, the leading cryptocurrency exchange and Web3 company, has announced that its Protection Fund achieved a valuation of $648 million in January 2025, reflecting sustained growth and stability in the crypto market. The fund, designed to provide financial security for users during volatile market conditions, continues to demonstrate its resilience and importance as Bitcoin and other digital assets experience significant price movements.In January 2025, Bitget's Protection Fund reached a peak valuation of $690 million, maintaining its upward trajectory as Bitcoin traded within a range of $87,000 to $105,000. Throughout January, the Protection…

  • Finance Investment, Political
  • 13/02/2025
  • 06:00
Monash University

Bold policy action required as Australia falls behind on social, economic and environmental wellbeing

Bold policy shifts are needed to get Australia’s falling social, economic and environmental wellbeing back on track, new modelling from Monash University shows. Developed by the Monash Sustainable Development Institute (MSDI), the modelling shows a lack of action now to plan for decades ahead will leave the nation with persistent poverty, income inequality and further biodiversity decline across the country. The new modelling is detailed in the University’s third Transforming Australia: SDG Progress Report, which tracks the nation’s progress towards the UN Sustainable Development Goals – 17 goals Australia and other nations adopted in 2015 to improve social, economic and…

Media Outreach made fast, easy, simple.

Feature your press release on Medianet's News Hub every time you distribute with Medianet. Pay per release or save with a subscription.