EVOLUTION OF THE CAPITAL MARKET AND MACROECONOMICS OF AN EMERGING MARKET. CASE STUDY FOR THE CZECH REPUBLIC

Abstract

The economic and financial state of an emerging European country is undeniably closely related to the evolution and mechanisms that engage the European Union markets. The objective of this paper is to analyze in parallel the macroeconomic and capital market evolution of the Czech Republic, in the context of integration at European level, in order to highlight these connections and compare the path of these indicators with those of other emerging European countries. This paper studies the contagion of emerging markets to events that create inflections of markets at international level, as well as the correlations between the stock market and macroeconomic indices, in order to highlight those factors that lead to a direct influence of the macroeconomic and stock market environment. Through a descriptive analysis of the most relevant capital market indicators and macroeconomics, the study empirically addresses the evolution of the Prague stock exchange in parallel with the economic condition of the Czech Republic, finding similarities and differences in the behavior of these indices. For this analysis, the following indicators were selected: the total value of the traded shares, the number of domestic companies listed on the stock exchange, GDP per Capita, the annual evolution of GDP, the consumer price index, foreign direct investments, net inflows, as well as the current account balance. The study may represent a starting point in a broader analysis of the correlations of the economic and financial mechanisms that are based on the phenomenon of globalization, leading to the determination of common factors that affect the emerging markets in similar stages of development.

Keywords

• : czech republic
• macroeconomic indicators
• capital market
• globalisation