The Comparison and Relationship

Factors Measurement

a) Interest Rates
Interest rates determine the cost of doing business for firms and return on assets such as bonds, which serve as substitutes for stocks. Thus, an increase in interest rates makes bonds more attractive relative stocks therefore the price of the stocks will fall subjectively.
b) Average Price
The average price per share is important to know for tax purposes and the average price per share also determines the break-even point for a stock. (www.investorglossary.com)
c) Volume of Transaction
The number of shares or contracts traded in a security or an entire market during a given period of time. It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a seller, then the volume for that period increases by 100 shares based on that transaction.
Investopedia explains Volume as an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. (www.investopedia.com)
Market timers often use volume as an indicator of future price change. For instance, some traders believe that a surge in trading volume on a stock is a precursor to a rapid change in price. The theory is that important news does not reach everyone at the same time, so an unexpected increase in volume suggests important news has been leaked.
d) The Capital Market Efficiency
The assumptions about what information is available to investors and reflected in the price in the Capital Market. Hence, the economist believed and defined three levels of market efficiency:
1. Weak form: all the past prices for a stock were impounded into today’s price; price today simply followed a random walk with no correlation with the past patterns.
2. Semi-Strong form: today’s price reflected not only the all past prices, but also all publicly available information.
3. Strong form: today’s price reflected all the information that could be acquired through a close analysis of the company and the economy.
e) The Capital Market Index
A 'national' index represents the performance of the stock market of a given nation—and by proxy, reflects investor sentiment on the state of its economy. The most regularly quoted market indices are national indices composed of the stocks of large companies listed on a nation's largest stock exchanges, such as the American S&P 500, the Japanese Nikkei 225, and the British FTSE 100.


D. Comparison
Indonesia India German
Interest Rate 0,0675 0.075 0,0125
Average Closing Price 2170,14 14745,4 6171,5
Volume of Transaction 1697181152 24946,7 17054702
Market Efficiency semi-strong weak-form Semi-Strong
Market Index Capitalization- Cap-weighted Total Return
weighted


E. Relationship
Because these three countries are located in far distance from one to another as geographically in different islands, the capital markets are having a very low correlation one to another and also the events on one country have a very little impacts on the other two countries, vice versa, this is happening as the market indexes and market efficiencies from all three capital markets are likely to be semi-strong and weak-form thus all the information available in the markets are reflected lightly to the price of stocks and also the movement of the capital markets.