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Title
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Fundamental global markets interconnectivity and shipping market efficiency
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Author
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Abstract
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| One of the main elements of global market efficiency is the level of access to relevant economic information. Interaction between any market with global fundamental markets namely, capital, currency and commodities could make these information available; consequently provide more efficiency to the market. The efficiency by interrelationship in global markets is developing at an unprecedented rate. Shipping markets are important players in the process of globalisation through their roles in trade and production processes. However, the shipping markets lag behind that of the global economy. This paper investigates the level of interaction between the freight market, exchange rates international trade and oil markets (bunker price as proxy) to identify the level of information efficiency in this market. The results suggested that freight markets are not influenced by the trade-weighted index of exchange rates, while it shows a closer relation with international trade index and bunker prices. This is important evidence to show that shipping market prices would mainly be "determined" by the level of international trade and bunker prices, and would not "discover" within a modern markets process, through interrelationship with global fundamental markets. Furthermore, Granger causality results suggest that exchange rates movements do not transmit a significant exogenous shock to freight futures while trade index and bunker prices do. |
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Language
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English
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Source (book)
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IMEA 2010, Lisbon
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Publication
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2010
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