Unraveling Hidden Order in the Dynamics of Developed and Emerging Markets

The characterization of asset price returns is an important subject in modern finance. Traditionally, the dynamics of stock returns are assumed to lack any temporal order. Here we present an analysis of the autocovariance of stock market indices and unravel temporal order in several major stock markets. We also demonstrate a fundamental difference between developed and emerging markets in the past decade - emerging markets are marked by positive order in contrast to developed markets whose dynamics are marked by weakly negative order. In addition, the reaction to financial crises was found to be reversed among developed and emerging markets, presenting large positive/negative autocovariance spikes following the onset of these crises. Notably, the Chinese market shows neutral or no order while being regarded as an emerging market. These findings show that despite the coupling between international markets and global trading, major differences exist between different markets, and demonstrate that the autocovariance of markets is correlated with their stability, as well as with their state of development.     

Urban markets and diversity: towards a research agenda

In this paper we advocate the study of local street markets to explore fundamental issues about the relationship between economy and society. This relationship evolves over time and we believe that it has been recast in an age of increasing cultural diversity and neo-liberal state regulatory structures. In street markets we can see how diversity and the nature of economic transactions become mutually constitutive. We argue that cultural diversity propels local markets, while everyday interactions in markets influence intercultural relationships. These complex processes are affected by the spatiality of markets and the regulatory environments within which they operate. We conclude by framing a research programme on street markets and discuss a number of methodological complications that would need to be addressed in this endeavour.     

Being on the Field When the Game Is Still Under Way. The Financial Press and Stock Markets in Times of Crisis

This paper looks at the relationship between negative news and stock markets in times of global crisis, such as the 2008/2009 period. We analysed one year of front page banner headlines of three financial newspapers, the Wall Street Journal, Financial Times, and Il Sole24ore to examine the influence of bad news both on stock market volatility and dynamic correlation. Our results show that the press and markets influenced each other in generating market volatility and in particular, that the Wall Street Journal had a crucial effect both on the volatility and correlation between the US and foreign markets. We also found significant differences between newspapers in their interpretation of the crisis, with the Financial Times being significantly pessimistic even in phases of low market volatility. Our results confirm the reflexive nature of stock markets. When the situation is uncertain and unpredictable, market behaviour may even reflect qualitative, big picture, and subjective information such as streamers in a newspaper, whose economic and informative value is questionable.     

Accelerating adoption of genetically modified crops in Africa through a trade liability regime

Given the apparently unbridgeable divide that has developed between the 25 odd countries that grow and trade GM crops and the evolving EU regulatory hurdles, it may be time to consider alternative strategies for realizing a global market for agricultural products. Africa is one area of the world where the battle over GM agriculture is being played out, yet it is the continent where GM could have the greatest positive impact. Numerous African nations, given their long‐standing trade connections to European nations, fear that allowing the commercialization of GM crops could lead to comingling of GM and conventional products and, hence, the loss of export opportunities to the EU. These are legitimate concerns. One potential solution that warrants serious consideration would be to establish a pool of funds that could be accessed by African agricultural commodity exporters in instances where exports to Europe are rejected. A production levy could be imposed in leading industrial adopting nations (i.e., Australia, Canada and the United States). The revenue raised would provide an endowment fund that could be used to offset the costs arising from import refusals. African‐sourced shipments rejected by the EU will most certainly have alternate markets, but could receive a reduced price or incur higher costs associated with serving alternate markets. The intent of the fund would be to compensate for the real difference between the net returns contracted with European importers and the final market price received. This article examines the feasibility of establishing such a fund and discusses the funding options.     

Evolvement of uniformity and volatility in the stressed global financial village

Background

In the current era of strong worldwide market couplings the global financial village became highly prone to systemic collapses, events that can rapidly sweep throughout the entire village.

Methodology/Principal Findings

We present a new methodology to assess and quantify inter-market relations. The approach is based on the correlations between the market index, the index volatility, the market Index Cohesive Force and the meta-correlations (correlations between the intra-correlations.) We investigated the relations between six important world markets—U.S., U.K., Germany, Japan, China and India—from January 2000 until December 2010. We found that while the developed “western” markets (U.S., U.K., Germany) are highly correlated, the interdependencies between these markets and the developing “eastern” markets (India and China) are volatile and with noticeable maxima at times of global world events. The Japanese market switches “identity”—it switches between periods of high meta-correlations with the “western” markets and periods when it behaves more similarly to the “eastern” markets.

Conclusions/Significance

The methodological framework presented here provides a way to quantify the evolvement of interdependencies in the global market, evaluate a world financial network and quantify changes in the world inter market relations. Such changes can be used as precursors to the agitation of the global financial village. Hence, the new approach can help to develop a sensitive “financial seismograph” to detect early signs of global financial crises so they can be treated before they develop into worldwide events.     

Analyzing the Long Term Cohesive Effect of Sector Specific Driving Forces

Financial markets are partially composed of sectors dominated by external driving forces, such as commodity prices, infrastructure and other indices. We characterize the statistical properties of such sectors and present a novel model for the coupling of the stock prices and their dominating driving forces, inspired by mean reverting stochastic processes. Using the model we were able to explain the market sectors’ long term behavior and estimate the coupling strength between stocks in financial markets and the sector specific driving forces. Notably, the analysis was successfully applied to the shipping market, in which the Baltic dry index (BDI), an assessment of the price of transporting the major raw materials by sea, influences the shipping financial market. We also present the analysis of other sectors—the gold mining market and the food production market, for which the model was also successfully applied. The model can serve as a general tool for characterizing the coupling between external forces and affected financial variables and therefore for estimating the risk in sectors and their vulnerability to external stress.     

Price interconnection of fuel and food markets: Evidence from biodiesel in the United States

The food versus fuel issue has attracted considerable attention with the rapid growth of global biofuel production. The previous literature examining the interconnectedness between biofuel, fossil fuel and agricultural markets employed futures and spot prices. However, food security needs to be discussed with non-financial market prices, such as wholesale prices, since retail companies and households usually do not purchase products directly from financial markets, which encompass speculative activities, making them more volatile than non-financial ones. This paper focuses on non-financial markets in the United States to investigate the price-interconnection of biodiesel, highway diesel, crude oil, and soybean, initially applying partial wavelet coherence and the Diebold-Yilmaz connectedness index to price transmission research on biodiesel, highway diesel, crude oil, and soybean. Our main results are as follows: First, significant coherence between biodiesel and soybean, biodiesel and highway diesel, and highway diesel and crude oil is identified in the short and long term. Second, crude oil and biodiesel prices are found to be net transmitters, while soybean and highway diesel prices are net receivers. Finally, the crude oil market is identified as the source of spillovers among the four markets, and strongly influences the highway diesel market.     

Current and Future Use of Nematodes in Biocontrol: Practice and Commercial Aspects with Regard to Regulatory Policy Issues

Constraints about the use of chemical insecticides have limited the availability of control measures against soil-borne insect pests. Entomopathogenic nematodes of the genera Steinernema and Heterorhabditis provide an environmentally safe and economically reasonable alternative. Their life cycle and current production, storage and formulation technology are described. An overview of their safety, use in integrated pest management and current market potential (US$10 million in 1994) is also given. The costs of research and development efforts and the scale-up of production technologies are discussed in relation to the current and future market potential. Large-scale, outdoor application will require additional scientific and technical progress in the areas of production, storage, formulation and application. Besides public funding, the current niche markets will need to provide the financial basis for further development, provided that regulatory conditions will not limit the exploitation of the nematodes' market potential. It is recommended that nematodes should be exempted from registration. Rules for risk assessment in the use of exotic nematodes should be internationally harmonized and related specifically to the biology and ecology of these nematodes. The volume of current markets would not justify the costs of registration procedures currently required for chemical or microbial insecticides or genetically engineered organisms. Regulatory policies should aim at supporting the further introduction of entomopathogenic nematodes as biocontrol agents.     

Recombinant plant-derived pharmaceutical proteins: current technical and economic bottlenecks

Molecular pharming is a cost-effective platform for the production of recombinant proteins in plants. Although the biopharmaceutical industry still relies on a small number of standardized fermentation-based technologies for the production of recombinant proteins there is now a greater awareness of the advantages of molecular pharming particularly in niche markets. Here we discuss some of the technical, economic and regulatory barriers that constrain the clinical development and commercialization of plant-derived pharmaceutical proteins. We also discuss strategies to increase productivity and product quality/homogeneity. The advantages of whole plants should be welcomed by the industry because this will help to reduce the cost of goods and therefore expand the biopharmaceutical market into untapped sectors.     

Crossed and Locked Quotes in a Multi-Market Simulation

Financial markets are often fragmented, introducing the possibility that quotes in identical securities may become crossed or locked. There are a number of theoretical explanations for the existence of crossed and locked quotes, including competition, simultaneous actions, inattentiveness, fee structure and market access. In this paper, we perform a simulation experiment designed to examine the effect of simple order routing procedures on the properties of a fragmented market consisting of a single security trading in two independent limit order books. The quotes in the two markets are connected solely by the routing decision of the market participants. We report on the health of the consolidated market as measured by the duration of crossed and locked states, as well as the spread and the volatility of transaction prices in the consolidated market. We aim to quantify exactly how the prevalence of order routing among a population of market participants affects properties of the consolidated market. Our model contributes to the zero-intelligence literature by treating order routing as an experimental variable. Additionally, we introduce a parsimonious heuristic for limit order routing, allowing us to study the effects of both market order routing and limit order routing. Our model refines intuition for the sometimes subtle relationships between the prevalence of order routing and various market measures. Our model also provides a benchmark for more complex agent-based models.     

An Experiment on Prediction Markets in Science

Prediction markets are powerful forecasting tools. They have the potential to aggregate private information, to generate and disseminate a consensus among the market participants, and to provide incentives for information acquisition. These market functionalities can be very valuable for scientific research. Here, we report an experiment that examines the compatibility of prediction markets with the current practice of scientific publication. We investigated three settings. In the first setting, different pieces of information were disclosed to the public during the experiment. In the second setting, participants received private information. In the third setting, each piece of information was private at first, but was subsequently disclosed to the public. An automated, subsidizing market maker provided additional incentives for trading and mitigated liquidity problems. We find that the third setting combines the advantages of the first and second settings. Market performance was as good as in the setting with public information, and better than in the setting with private information. In contrast to the first setting, participants could benefit from information advantages. Thus the publication of information does not detract from the functionality of prediction markets. We conclude that for integrating prediction markets into the practice of scientific research it is of advantage to use subsidizing market makers, and to keep markets aligned with current publication practice.     

Environmental Sampling for Avian Influenza A(H7N9) in Live-Poultry Markets in Guangdong,China

BackgroundTo provide an increased understanding of avian influenza A(H7N9) activity in live-poultry market in space and time and hence improve H7N9 epidemic control, an ongoing environmental sampling program in multiple live-poultry markets across Guangdong, China was conducted during March 2013–June 2014.MethodsA total of 625 live-poultry markets throughout 21 prefecture areas took part in the study. A total of 10 environmental sites in markets for sampling were identified to represent 4 different poultry-related activity areas. At least 10 environmental samples were collected from each market every month. The real time RT-PCR was performed to detect the avian influenza A(H7N9) virus. Field survey was conducted to investigate the sanitation status of live-poultry markets.ResultsThere were 109 human infections with H7N9 avian influenza in Guangdong, of which 37 (34%) died. A total of 18741 environmental swabs were collected and subjected to real-time RT-PCR test, of which 905(4.83%) were found positive for H7N9 virus. There were 201 (32.16%) markets affected by H7N9 in 16 prefecture areas. The detection of H7N9 virus in markets spiked in winter months. 63.33% markets (38/60) had no physical segregation for poultry holding, slaughter or sale zones. Closing live-poultry market significantly decreased the H7N9 detection rate from 14.83% (112/755) to 1.67% (5/300).ConclusionsThis study indicates the importance of live-poultry market surveillance based on environmental sampling for H7N9 Avian Influenza control. Improving live-poultry market management and sanitation and changing consumer practices are critical to reduce the risk of H7N9 infection.     

Impact of Stock Market Structure on Intertrade Time and Price Dynamics

We analyse times between consecutive transactions for a diverse group of stocks registered on the NYSE and NASDAQ markets, and we relate the dynamical properties of the intertrade times with those of the corresponding price fluctuations. We report that market structure strongly impacts the scale-invariant temporal organisation in the transaction timing of stocks, which we have observed to have long-range power-law correlations. Specifically, we find that, compared to NYSE stocks, stocks registered on the NASDAQ exhibit significantly stronger correlations in their transaction timing on scales within a trading day. Further, we find that companies that transfer from the NASDAQ to the NYSE show a reduction in the correlation strength of transaction timing on scales within a trading day, indicating influences of market structure. We also report a persistent decrease in correlation strength of intertrade times with increasing average intertrade time and with corresponding decrease in companies'' market capitalization–a trend which is less pronounced for NASDAQ stocks. Surprisingly, we observe that stronger power-law correlations in intertrade times are coupled with stronger power-law correlations in absolute price returns and higher price volatility, suggesting a strong link between the dynamical properties of intertrade times and the corresponding price fluctuations over a broad range of time scales. Comparing the NYSE and NASDAQ markets, we demonstrate that the stronger correlations we find in intertrade times for NASDAQ stocks are associated with stronger correlations in absolute price returns and with higher volatility, suggesting that market structure may affect price behavior through information contained in transaction timing. These findings do not support the hypothesis of universal scaling behavior in stock dynamics that is independent of company characteristics and stock market structure. Further, our results have implications for utilising transaction timing patterns in price prediction and risk management optimization on different stock markets.     

Risky business: Discourses of risk and (ir)responsibility in globalizing markets

This paper addresses aspects of 'market culture' as it is expressed in media discourse and among financial traders and corporate managers. Particular focus is placed on their perspectives on risk and responsibility. It is suggested that the ideas and actions of financial traders and corporate leaders contribute in significant ways to the structuring of market transactions across the world. They contribute to the diffusion of perspectives on markets and market actors, influence our understandings of the scope of individual action in market transactions, and play a vital role in the development and organization of contemporary markets. The paper argues that perceptions of risk and responsibility are culturally embedded in the particular contexts in which these actors operate; that they are tightly interwoven as aspects of developing global markets; and presented as forces of nature in discourses that produce not only 'truths' but also power. It is suggested that the fetishization of the market contributes to the evasion of responsibility among financial traders, whereas it presents an opportunity for corporations to position themselves as socially responsible actors. Central to the understanding of the differing conceptualizations of risk and responsibility are perceptions of agency of different actors in financial markets.     

A cut above the rest? Private anthropometrics in marriage markets

A large body of economic research suggests that publicly observable anthropometric characteristics affect labor and marriage market outcomes. Private anthropometrics may not affect these outcomes. We examine male circumcision in marriage markets in Zambia. Our analysis reveals substantial variation across local marriage markets in circumcision prevalence relative to preference for circumcised partners, as well as excess aggregate demand for circumcised males. Regression estimates suggest a marriage market premium of approximately one-half to one year of additional schooling for matching with a partner of preferred anthropometric type in a local marriage market with excess demand for that anthropometric characteristic.     

Is There Any Overtrading in Stock Markets? The Moderating Role of Big Five Personality Traits and Gender in a Unilateral Trend Stock Market

Overtrading is a common anomaly among stock investors. This study examines the relationship between overtrading and investment returns and the impact of the Big Five traits and gender on overtrading in a unilateral trend stock market using a simulated stock investment system. The data were derived from a sample of undergraduates from six universities who performed in a simulated stock investment situation and had their personality traits measured by the Big Five Personality Questionnaire. The results indicate that: (1) Overtrading was significant in rising stock markets, but not significant in falling markets. (2) The degree of female investors who overtraded was significant in rising markets. (3) The degree of overtrading investors who were high in extroversion or agreeableness was significant in rising markets. The implications of these results for more effective investment strategies are discussed.     

On the Attractiveness of Product Recovery: The Forces that Shape Reverse Markets

Product recovery is a major contributor for implementing sustainable business practices. Within such operations, which are either driven by legislation or economic rationales, practitioners face strategic issues concerning reverse market entry and positioning. Although the complexity of acting on reverse markets is widely acknowledged, a comprehensive framework to facilitate decision making in this area is lacking. In an attempt to fill that gap, we develop a model that supports original equipment manufacturers’ (OEMs’) assessment of the attractiveness of reverse markets. We identify, from a comprehensive literature analysis, in‐depth interviews, and engagement with a dozen companies from different countries, factors that influence key characteristics of reverse markets, and consolidate this lengthy list into a comprehensive model intuitively applicable to business practice. The model combines five forces that drive reverse markets: access to recoverable products; threat of independent recovery companies’ (IRCs’) market entry; rivalry for recoverable products; adverse effects on core business; and remarketing opportunities. We propose for each a set of attributes that influences its power and direction. To demonstrate the efficacy of the model, we apply it in two industry settings: recovery of white goods in the United Kingdom and paper recycling in Germany. The present research enables OEMs to understand the structure and forces that drive reverse markets, identify levers to influence those markets, anticipate market developments, and formulate resilient strategies for product recovery.     

A trade-based method for modelling supply markets in consequential LCA exemplified with Portland cement and bananas

Purpose

This study proposes a method based on the analysis of trade networks over time for modelling the marginal supply of products in consequential life cycle assessment (LCA). It aims at increasing the geographical granularity of markets, accuracy of transport distances and modes and material losses during transit by creating country-specific markets, instead of region-based supply-origin markets as currently proposed by ecoinvent. It leads to a better consideration of the environmental weight of trade following a change in demand on a local market and may serve as an inspirational basis for future releases of consequential life cycle inventory (LCI) databases.

Methods

The method uses ecoinvent v.3.3 as a support LCI database and two distinct traded products: bananas and grey Portland cement. Each country involved in the trade of a said product has a corresponding market created in the LCI database. The behavior of market to a marginal change in internal demand is modelled after its marginal trading preferences: it can either affect local production, imports, exports or a mix of the first two. Markets are linked to one another based on the linear regression analysis of their historical trade relations. The inventories that follow an increase in demand of 1000 kg of bananas and grey Portland cement are calculated for each market involved in their trade and are environmentally characterized and compared to the generic region-based market datasets provided by ecoinvent to assess the gains in accuracy through a higher geographical granularity. Furthermore, the characterized inventories of the markets for bananas are compared to a parallel scenario where transport distances are kept to a minimum using the shortest path method. It isolates the environmental burden associated to the utility maximization of the demand.

Results and discussion

When comparing the characterized impacts of country-specific markets with the generic ecoinvent market datasets, disparities in results appear. They highlight the importance of transport induced by demand displacement and losses of material during transport, both being the consequences of the extent a given market decides to be supplied directly from producing markets at the margin. These are aspects that may go unaccounted for when using generic regional markets. Second, optimizing transport distances for each market decreases the environmental impacts for most categories by more than 70%.

Conclusions

This study shows there is a need for modelling and understanding market relations to more accurately define the role of trade, supply chain efficiency and import policies in LCA.

     

Biomass market dynamics supporting the large‐scale deployment of high‐octane fuel production in the United States

US Department of Energy research aimed at co‐optimizing fuels and engine performance identified several bioblendstocks that can improve fuel economy including an aromatic‐rich hydrocarbon derived from woody biomass. This work supports an analysis of its large‐scale deployment implying a production target of approximately 15 billion liters of bioblendstock for the supply of 57 billion liters of high‐octane fuel by 2050. It simulates potential transition pathways to lignocellulosic feedstock market structures capable of supplying a mature biorefining industry at this scale. In the present absence of biorefineries, transitions are modeled via nonbiofuel feedstock markets, so‐called companion markets. The resource distribution across several demand industries is simulated to determine biomass availability and price dynamics over time. Results indicate that the wood supply base is mainly influenced by traditional markets including housing and pulp and paper. The selected companion market of wood pellet combustion for heat and electricity generation is found to positively stimulate biomass mobilization, especially in the initial absence of biorefineries. Eventually, biorefineries are found to be able to out‐compete the companion market. As such, they directly benefit from the processing (i.e., pelleting) capacity established to produce commodity‐type intermediates for the companion market. We conclude that the amount of bioblendstock produced is directly related to the size of the companion market (and its pelleting capacity). An initially larger companion market generates up to 20 million dry tonnes of additional feedstock, equivalent to 27 commercial‐scale biorefineries, or an additional production of 5 billion liters by 2050. Distinguishing between industry‐specific feedstock preferences based on average biomass quality characteristics, this analysis goes beyond past research efforts that assume automatic fungibility across different feedstocks. Improving engine performance is a key driver for the promotion of low‐carbon fuels derived from bioblendstocks. This analysis portrays feedstock market transition pathways for their large‐scale deployment.     

The cost of being valuable: predictors of extinction risk in marine invertebrates exploited as luxury seafood

Extinction risk has been linked to biological and anthropogenic variables. Prediction of extinction risk in valuable fauna may not follow mainstream drivers when species are exploited for international markets. We use results from an International Union for Conservation of Nature Red List assessment of extinction risk in all 377 known species of sea cucumber within the order Aspidochirotida, many of which are exploited worldwide as luxury seafood for Asian markets. Extinction risk was primarily driven by high market value, compounded by accessibility and familiarity (well known) in the marketplace. Extinction risk in marine animals often relates closely to body size and small geographical range but our study shows a clear exception. Conservation must not lose sight of common species, especially those of high value. Greater human population density and poorer economies in the geographical ranges of endangered species illustrate that anthropogenic variables can also predict extinction risks in marine animals. Local-level regulatory measures must prevent opportunistic exploitation of high-value species. Trade agreements, for example CITES, may aid conservation but will depend on international technical support to low-income tropical countries. The high proportion of data deficient species also stresses a need for research on the ecology and population demographics of unglamorous invertebrates.