The Chinese Yuan effect: An interaction of exchange rates and stock indices with import-export trade as indirect factors of China and the ASEAN-5 countries (2006-2014)

Date of Publication

2016

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Mar Andriel S. Umali

Defense Panel Chair

Patrick Salvacion Benito

Defense Panel Member

Ruben Carlo Asuncion

Regina Aseron

Abstract/Summary

China, being known as the largest Asian economy, has played a significant role in the global economy which also influenced the growth and expansion of its trading relationship with its neighboring countries, specifically the ASEAN community. Its initial members namely Indonesia, Malaysia, Philippines, Singapore, and Thailand or commonly known as the ASEAN-5, has attracted numerous investors and multinational firms into their countries.

The purpose of this study is to determine the causal relationship between the Chinese Yuan exchange rates and ASEAN-5 stock indices. It also analyzes as to what extent does trading (i.e. exports, imports, and total trade), as an indirect factor, affect the relationship of the said variables. The variables of the study are the respective foreign exchange rates, stock indices, and trading activities of China and the ASEAN-5's. The period covered for the variables are from January 2006 to December 31, 2014. In order to test for the causal relationship between the variables, the Granger causality and Johansen cointegration test were utilized in this study.

Results show that only the Chinese Yuan/Thailand Baht exchange rate had a bidirectional relationship with the China's stock index. While the rest of the ASEAN-5 countries except Malaysia had a unidirectional relationship with the Chinese Yuan exchange rate. With these results, the group concludes that there is no general consensus arrived at on the relationship between the two variables. Moreover, this may imply that the Chinese Yuan will not drastically impact the trading activities toward the ASEAN-5 countries. With the recent implementation of the ASEAN Integration, the ASEAN community can be seen as a threat to China and can possibly overthrow them. However, the strong presence and influence of China in the global economy still persist.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU21363

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

iii, 250 leaves ; 28 cm. + ; 1 computer optical disc.

Keywords

Foreign exchange rates--China; Stocks--Prices--China; Stock price indexes--China; Foreign exchange rates--Southeast Asia; Stocks--Prices--Southeast Asia; Stock price indexes--Southeast Asia

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