BANKING AND FINANCE ANALYSIS IN AUSTRALIA

Document Type:Thesis

Subject Area:Finance

Document 1

This has led to the favorable balance of trade to the Australian Federal government. Nevertheless, there have been also some instances where the price index of the two financial institutions has been negatively affected by some of the monetary policies as well as environmental factors (Viney and Phillips, 2015). In the course of doing business, the market has been affected by systematic news which saw some of the firms record a decrease in the stock prices in the financial market. On the other hand, BHP and CBA have also been victims of the unsystematic risk that did affect their financial and share index at particular periods. The project will also discuss the physical policies that have been set up by the Australian Federal government to streamline the financial sector to strengthen the economic conditions of the Australian citizens.

Sign up to view the full document!

BHP and CBA Share Prices The financial market in Australia has been growing by the day and the two companies, this is, BHP and CBA have been on the rise for the past five years regarding their price shares on the stock market (Rba. gov, 2017). The ordinary share price of the BHP in the Australian stock market as at 18th May 2018 stood at the $50. 81 against the Australian currency. On the other hand, the CBA share price in the stock market was trending at 70. The company did cut the production of the iron ore due to the fact that her dumpers had a problem to do with reliability. The investors have not concentrated on the woes the firm faces in the management but chose to concentrate on the energy production as well as the metallurgical coal.

Sign up to view the full document!

The fact that the industrial metals are recording a high performance in the sales of the industrial metals means that the investors have the confidence that the firm is doing well. The firm is also relying on the speculation that the firm is expected to be selling her produce in the United States in the coming year’s means that the investors are optimistic of the rise in the market prices for the BHP products especially those in assets and gas. Part Two: Fiscal Policy, Monetary Policy, and Debt Markets The Australian federal government has always been on the forefront in advocating for the government spending within its means. The priority of the federal government is to ensure that there is a growth of the economy and achieve a surplus budget of one percent which will be used to boost the investment in the employment industry.

Sign up to view the full document!

The use of the structural balance of trade strategy does remove the aspects that can lead to the decrease in the economic strength in the future. Figure 3 shows the revenues and expenses of Australian Federal Government Sources: Australian Government, Budget strategy and outlook: budget paper no 1: 2013–14, p. 10-10 and Secretary to the Treasury and Secretary of the Department of Finance and Deregulation, Pre-election Economic and Fiscal Outlook 2013, p. The fiscal strategies and policies administered by the Australian reserve bank should be focused on ensuring that the government expenditure does not exceeds the level of the revenues generated by the government institutions. The two theories can be used to explain the shape of the curve and they are expectation and segmented market theory which have been used to explain the shape of the above curve.

Sign up to view the full document!

The expectation theory states that there will always be higher returns if the maturity of the bonds or securities will be increased. The assumption is that as time increases, the interest rates will continue to accrue in the process which will consequentially increase the value of the bonds. The investors will prefer buying the floated bonds that have a longer maturity as compared to the ones that have a shorter term maturity t because of the yields that they expect to get at the end of the period assigned. On the other hand, the segmentation market theory sees the investors get confined to certain markets which make the curve reflect the prevailing investment policies. After floating the exchange rate currency in the year 1983, the exchange regime rate made it difficult for the free flow of the money supply in the country (Aofm.

Sign up to view the full document!

gov, 2018). Nevertheless, the country has improved in the latest years through the use of the policy termed as “monetary targeting”. The demand and sales of the Australian dollars was affected by the sales of the Australian dollars in the market which meant that the domestic money supply among the citizens increased expeditiously. The increase in the cash in the market always has a negative effect to the strength of the domestic currency. For the federal government to ensure that it maintains the fiscal policies, it will have to ensure that the balance of trade is positive by avoiding spending more than it generates in both the workforce and the public sector. References Aofm. gov,. The AOFM’s operations support efficient management of the Australian Government’s financing task and debt portfolio, and are influential in developing functional and robust domestic financial market for Australia.

Sign up to view the full document!

From $10 to earn access

Only on Studyloop

Original template

Downloadable