Assessment 2– Group Analytical Assignment

Assessment 2– Group Analytical Assignment

FIN302 – International Finance

Total Marks:     This assignment is worth 25 marks (25 % of the total marks in the unit).

Instructions:

• Students are required to answer all questions and follow all requirements.
• Due date for this assignment is xx/xx/20xx.
• Your answer must be uploaded both to Moodle as a word file and also handed over to your Lecturer as a printed copy.
• You need to support your answers with appropriate Harvard style references where necessary.
• Include a title/cover page containing the subject title, code, student names and ID numbers.
• Please save the document as FIN302AT1_first name_Surname_Student Number Eg: FIN302AT2_John_Smith_20200001

Group Assignment Requirements

• Students are required to form groups of 2-3 students each, however, if you would like to complete the assignment by yourself, you can do it individually (please inform your Lecturer if you choose to do the assignment by yourself).

Report structure

Title page: group number, student name, and student ID, date of submission

• Criteria 1: Executive Summary
• Criteria 2: Table of Contents: with section numbers and headings
• Criteria 3: Examine factors that influence and drive the share performance of MNCs and foreign stocks listed on the Australian Stock Exchange (ASX) over time; Evaluate key issues that affect companies competing in a global arena
• Criteria 4: Full ‘in-text’ referencing: citing at least four academic sources

Reference list: using the A.P.A. referencing style

• Criteria 5: Grammar, sentence formation, punctuations and logic

Marks will be allocated as follows:

Introduction, assignment presentation (20%)

• Well planned structure.
• The group’s report reads well (not confusing). English expression is appropriate.
• The introduction clearly outlines the objective of the report while the conclusion reiterates the objective and evaluates the arguments.
• Clearly set up the investment portfolio table.

Details of the investing project (60%)

• The background information of each company invested in the portfolio need to be clear and concise. Share price records are accurate and record for the whole investing period as required. (10%)
• Analysis of market or company specific factors are clear and sufficient (Charts or graphs need to be correct and appropriate and draw the right conclusion ) – 25%
• Analysis of foreign exchange rate relevant to share prices are clear and sufficient (Charts or graphs need to be correct and appropriate and draw the right conclusion ) – 25%

Logical arguments and conclusion (20%)

• The group’s arguments are logical and consistent for the portfolio investment period.
• Conclusion is made based on the investing experience in the project.

GROUP INTERNATIONAL INVESTING PROJECT-25%

This project allows you to learn more about international investing and about companies that compete in the global arena.

You need to create a stock portfolio of at least 2 Australian multinational corporations and 2 foreign companies that are listed in ASX. You will monitor the performance of your portfolio over the course of the Trimester (teaching period, e.g. T1 2020) and ultimately will attempt to explain your portfolio performance. The explanations will offer insight into what is driving the valuations of the Australia-based MNCs and the foreign companies’stocks over time.

Select two stocks of Australia-based MNCs that you want to include in your portfolio. If you want to review a list of possible stocks or do not know the ticker symbol of the stocks you want to invest in, go to the website https://au.finance.yahoo.com/. Make sure that your companies conduct a substantial amount of international business.

Next, select two foreign companies’ stocks that are traded on the Australian Securities Exchange (ASX) and are not from the same foreign country. Many foreign stocks are traded on the ASX; go to the website http://www.asx.com.au/products/foreign-entity-data.htm to get the Foreign Exempt and Foreign Domicile companies listed on the ASX. You should select the ASX code of the foreign company; for example, AIZ is the ASX code for Air New Zealand. You can use this ASX code to review the company’s background information, including a description of its business and its stock price trend over the last year. It is assumed that you will invest A$100,000 in each stock that you purchase. Your purchase price should be the closing price of the stocks you have chosen as at 20 March 2020.

List your portfolio in the following format:

You can easily monitor your portfolio using various Internet tools. If you do not already use a specific website for this purpose, go to https://au.finance.yahoo.com/. Follow the instructions, and in a few minutes, you can create your own portfolio tracking system. This system not only updates the values of your stocks but also provides charts, recent news, and other information on the stocks in your portfolio.

EVALUATION

At the end of each week during the semester, you should evaluate the performance and behavior of your stocks. You are required to record the prices of the stock as at closing on Friday each week. For example, your first week closing price should be taken after the stock market closed on Friday, 20th of March 2020 (end of week 3). Your final week of recording will be 1st of May 2020. Weekly stock price changes during the Mid-Term Break should also be recorded.

Part 1 – Basic information tracking record

1. Determine the percentage increase or decrease in each of your stocks over the period of your investment and report that percentage in a table like the one below for each week. In addition, offer the primary reason for this change in the stock price based on news about that stock or your own intuition. To review the recent news about each of your stocks, click on https://au.finance.yahoo.com/ and insert the ticker symbol for each company. Recent news is provided at the bottom of the screen.

WEEK 1

1. Write a basic introduction for each of the companies you have chosen.

Part 2 – Examine how market and company specific factors drive the share performance

1. Determine whether the performance of each of your Australia-based MNCs is driven by the Australian market. Assess the relationship between the Australian market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by Australian market conditions. Repeat this task for each Australia based MNC in which you invested.

1. Determine whether the performance of each of your foreign stocks is driven by the corresponding market where the company is based. Assess the relationship between the corresponding foreign market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by local market conditions. Repeat this exercise for each foreign stock in which you invested.

1. Explain how company-specific factors affect the movement of the share prices during this period.

Part 3- Examine how foreign business impact on share performance

1. Review annual reports and news about each of your Australia-based MNCs to determine where they do most of their business and the foreign currency to which they are most exposed. Determine whether your Australia-based MNC’s stock performance is influenced by the exchange rate movements of the foreign currency (against the Australian dollar) to which it is most exposed. You can convert the foreign currency to which the MNC is most exposed into Australian dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found. Repeat the steps for each Australia-based MNC in which you invested.

1. Determine whether the stock performance of each of your foreign companies is influenced by the exchange rate movements of the company’s local currency against the Australian dollar. You can convert the foreign currency of concern to Australian dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found. Repeat the steps for each of the foreign stocks in which you invest

Part 4- Review and conclusion

Comment on your overall portfolio performance and evaluate key issues you have learned during this international investment project.