This article is about the management of stocks securities in the market and highlights factors that may lead to a decline or rise in stock values. In any international market, there are universal factors that are used as co-determinants to guide investors and financial analysts in making sound financial investment decisions.
These factors are divided into two main components; external and internal factors. The latter refers to the prevailing market conditions, inflation rates, government policies on lending and borrowing rates, and investors risk perception in a country while the former refers to factors that are beyond a country’s control and may include; international donor conditions, international exchange rates, terrorism, external political relations and etcetera.
The current global economic downturn has left many economies wounded including big ones like the Japanese, America, Britain, and china. This article tries to explain how political relationships may lead to an economic surcharge in a country. Citing Russia and Ukraine as areas of the case study it is very interesting to understand how the two neighboring countries relate to each other and how their relationship affects their respective economies.
The writer also draws attention on how poor government policies on borrowing can adversely plunge a country into a financial crisis. It’s also apparent that the donor conditions such as those imposed on different countries by the international monetary funds like credit limits can be a stumbling block in trying to seek financial aid in and out of a country. In this scenario, the writer cites the Ukrainian government as having adopted poor financial planning decisions that is actually responsible for the financial crisis that it is currently undergoing.
Ukraine is currently having the lowest credit rating; this implies that it takes longer duration to pay back any credit facility extended to her by any borrowing agency. It is also clear that the citizens are not happy with the existing government since it has failed to control the inflation rate which is currently the highest in the region. The basic commodities are becoming unaffordable with prices continuing to shoot.
Ukraine’s political situation is also likely to worsen since the current president clung to power through orange demonstration that saw the then pro Russian government being overthrown, this will consequently lead to its currency becoming weaker against the world’s major currencies.
The Ukrainian government has already budgeted to have $5 billion deficit and still she is negotiating credit facilities with other countries that is likely to further exacerbate its financial situation. On the other hand Russian is enjoying on its economies of scale. If Russia can be able to lend its neighboring economies at a price slightly higher than the market rate then it will be a hallmark on its financial policies.
In market situations a good investor is one who capitalizes on its rivals’ weaknesses, turning every difficulty into an opportunity and thereby can decide to make a normal or supernormal gain. I also concur with Mr. Jerome Booth who heads Research at Ash more Investment Management Ltd in London, when he welcomes Russian efforts to try to enter into linkages for its investment stability.
The Russian government should go ahead to implement its investment plan of lending the local economies at the market rate at a time when they are unable finance themselves. This will see the Russian economy grow in the future and attract more foreign investment. On the other side the Ukrainian government should reconsider its decision to source additional credit facilities when they cannot even pay the last credit extended to them in the last two years. Its also important that Ukraine revaluates its political relationship with its neighbors.
Work cited
Emma O’Brien and Laura Cochrane, Russia Stock Gains Strengthen Putin as Ukraine Drops. Web.