Which currency? The currency reflects the national economy; the Stock exchange, reflects market estimates of quoted companies performance on global markets.

Paul: In the United States, the stock market is one indicator of the health of the economy. It's not the only economic indicator, but it is one of several factors that affect the overall economy.

The stock market shows how individual companies are performing. The money put into the stock market funds company growth and expansion. The stock market also shows if investors are confident (or not) in the economy. Unfortunately, investors sometimes react to world events and rumors, so the stock market can be very volatile.

The economy can also affect the stock market. Announcements on the state of the economy by the government like the unemployment rate and inflation rate can affect the buying & selling of stocks.

It should also be said that the stock market is not the economy. Many investors use their emotions to decide when to buy or sell stocks.

This is a good article that explains the relationship in the USA:

https://www.thebalance.com/how-do-stocks-and-stock-investing-affect-the-u-s-economy-3306179

Average stock market growth = 10%

Average economic growth rate = 3%

This gap is stable over the years.

For economic growth, see IMF report:

https://www.imf.org/en/Publications/WEO

For stock market return, see:

http://econompicdata.blogspot.com/2015/04/is-there-relationship-between-economy.html

Dariusz, your question needs to be put in perspective and answered in the context of the perspective though, one could go for a general response. I want to assume that what you mean by "situation in the Stock Exchange" is development in Stock Exchange/Market from 1970 to date. With this in mind, it implies you are asking about the size and nature of the relationship/correlation between national economy and Stock Market development within the given period. If we are on the same page, your question therefore translates into a simply research topic.

The answer should be based on empirical evidence not on rule of thumb.

There are several indicators of Stock market development as a sub set of the Financial Market development which in turn forms a major segment of the Financial system development. We have such indicators like stock market capitalization, Stock turnover ratio among others. Also some experts such as Svirydzenka of IMF have developed a composite index of financial market development (of which Stock Market is included). On the other hand, when talk of national economy, we are simply talking of gross domestic product(GDP) and its growth. In view of this, we could simply represent the growth by the annual growth rate.

From this background, your question could be narrowed to 'what is the extent of the difference between GDP growth rate and rate of growth in the Stock market -related performance indicators for the period 1970 to date? This requires empirical approach for an evidence-based answer. On a general note, there are differences as should be expected but in terms of co-movements, some economies have experienced positive correlation- suggesting that on average their stock markets have been developing/growing as their economies are growing while others have different tales to tell.

I wish to stop this far for now.

Thank you.

Dr Anthony Nzeribe Chizue Nwaubani

I share the same impression. It must be related the so-called financialization of capitalism. A problem remains why and how the gap has sustained.

Dear Prof. Prokopowicz,

We have through our research at the RHMHM School and also differentiably Mallick, Hamburger & Mallick (2016, 2017, 2018), Mallick, Raychaudhury , Mallick and others (2019) , developed the Econophysical String theoretic Systems Classification and Systems Integration Theory of Electronic Stock Markets and shown them to be EconoPhysical Sciences classificationwise like growth potentialwise tested electronic stock market systems to be string theoretic AGGNNnetwork fundamental field integrated with the universe by light and wave-particle duality at equilibrium in the learning field (Mallick (1993)), Mallick, Hamburger & Mallick (2018), which is by Higgs-Mallick mechanics vectorially embedded in the network learning field (Mallick et.al.). Hence by a kimit argument group closure in dimensions, even in the absence of full resolution of he forces and particles, mathematical econophysically it is discovered that no economic activity mass (or weight) can escape these network systems. It is a feature of SO(32) heterotic strinf matching field theory in the internetworked cybernetic econophysics field of globalised electronic stock market networks we have discovered. The only problem which needs to be rtesolved in the economic sciences field perse is the resolution of bounded rational activity and holes in the learning field as Prof. Thors Hansson in his Nobel Prize talk particularly hinted at. Mallick (1993) had discussed these holes in spacextime of expectations driven Arrow-Debreu type markets with the endogenous formation of the learning fields with US college level experiments on preference structures and methods of solutions.

Earl S.K.Mallick, Director S. Raychaudhury, Earl Prince S.Mallick and others,

The RHMHM School,

USA, Japan, Russia, India and wwwm

and our respective affiliations.

I find your question slightly hard to comprehend. But my thinking, from what I understand, is that context matters a lot. Talking from the perspective of Africa, stock exchange performance and growth has been undermined by a plethora of factors mostly political and macroeconomic. The actors in the markets are mainly foreign and these uncertainties spook them. Overall, stock exchange performance within the time frame you have set may be said to have regressed relative to economic growth. One notable exception, however, is the Johannesburg Stock Exchange which enjoys 90 percent of all portfolio flows into Africa.

It is true that many factor(some somehow unique to Africa) have widened the gap in the African scenario, yet it has to be acknowledged that the gap cuts across economies. I do not think the real concern should be the existence of a gap but rather ensuring sustainable positive co-movement and narrowing the gap. This is because even though, it is possible to have the two segments - the GDP and Financial Markets(inclusive of Stock Market ) to grow at the same rate, it appears rather rare. One may note that the gap across national economies can not be the same because of national peculiarities and circumstances which affect growth in the two segments. Even on average, it may not be the uniform because of some notable external headwings that seriously truncated growth. Such phenomena include the 2007-2009 global financial melt down, major shocks in the oil market various stock market crashes in different markets among others. There are many perspectives to the question.

In the context of the above discussion, the following question arises:

In the context of the above discussion, I am asking you: Does the improvement of analytical techniques through the use of Business Intelligence, Data Science, Big Data etc. platforms in the processes of conducting financial, fundamental and technical analyzes improve the issue of forecasting the valuation of securities and other assets listed on stock exchanges?

What do you think about this topic?

Please reply

In the context of the above considerations, another important question arises: Are there any signals on the capital markets, including stock exchanges, of potential, potential slowdown in the global economy in 2020, which may be the result of the continuation of trade wars conducted between the world's largest economies?

What do you think about this topic?

Please reply

Dear Colleagues and Friends from RG,

The recent (September 2019) attack on oil refineries in Saudi Arabia using technologically advanced drones is an example of a serious problem that can have negative economic and political effects. This attack caused a significant increase in the price of oil. Fuel market analysts do not rule out negative developments in the future. If this type of attacks on industrial installations were to be repeated, it could cause a global fuel crisis, which occurred e.g. in the 1970s.

Who cares about causing this type of economic crisis now?

What do you think about this topic?

Please reply

Dariusz Prokopowicz

Great topic and fairly "hot of the press." I have a couple of observations. They are as follows:-

Dear Colleagues and Friends from RG,

For many years, there has been a strong correlation between the state of the economic situation in the domestic and global economy, between business cycles, the development of key economic growth factors and the national socio-economic and monetary policy pursued by the state, and the situation on the financial markets, the situation and cyclical trends for many years. listed on the stock markets. However, since the 1970s, there have been more and more examples of emerging dissonance, diversity, and lack of full correlation between business cycle shaping, the development of key economic growth factors and the state's socio-economic and monetary policy pursued by the state, and the situation on the financial markets, the economic situation and cyclical stock market trends on the stock markets. In addition, as the scope of this correlation diminishes, the risk of unpredictability of the situation on financial markets increases. During this period, there were also more than before national and supra-national currency, financial and economic crises. To the analysis of the issue of the above-mentioned correlation, determinants of economic development should be added, which earlier until the 1970s did not develop much or did not occur at all, such as the development of ICT information technologies, Internet and advanced data processing Industry 4.0, high deregulation range financial markets, the growing importance of central banking in the financial systems of individual countries, the development of the international market currency system based on the model of floating exchange rates without parity of a fixed economic factor, e.g. resignation from gold parity and parity of one international currency, development of investment banking based on investment in securities valuable technology companies with high credit risk, development of derivatives and their use in hedging transactions concluded on other financial markets, investment product markets in the real economy and markets of the construction sector.

In the context of the above problems of analyzing the correlation of the situation on capital markets with respect to the economic situation and key determinants of economic development, it is important to answer the following questions:

If Brexit had happened, if Brexit had become a fact, how could strong short-term and short-term concessions appear on international financial markets?

Can Brexit or other factors, such as deepening currency wars between the world's largest economies, be a key factor in generating another financial crisis?

Or maybe once again too much overvalued market valuations of securities on stock exchanges and other assets on other financial markets, on the currency and commodity markets may be an important factor of increased systemic credit risk?

Can moral hazard and unreliable compliance with risk management process policies and procedures significantly increase credit risk in commercial banks and become a key factor leading to another financial crisis?

Can the factors leading to the next financial crisis include the dynamic development of ICT and Industry 4.0 information technologies implemented to support stock market transactions and the process of automating credit risk management?

Can the source of a serious next stock market crash on the stock markets and another global financial crisis be the speculative rise in property prices in major economies and / or moral hazard and exceeding safe credit risk levels in investments in corporations developing new technologies in ICT, internet and advanced data processing Industry 4.0?

Please reply

I invite you to discussion

Thank you very much

Best wishes

Dariusz Prokopowicz