The Baltic Dry Index (BDI) is an index that measures the daily average price of shipping raw materials by sea. The index indirectly measures the supply and demand for commodities such as coal, grain, and building materials. Since it takes years to build a ship, the supply of ships at any point in time is fixed and only through a change in prices can the market reach equilibrium in response to a change in demand. Thus, a rise in the index signifies an increase in the demand for cargo relative to the supply of ships.
Investors also use it as a leading economic indicator and to gauge the volume of global trade. It is viewed as a leading indicator because the goods shipped are usually intermediate goods to be used in the final production of other goods. Thus, most goods currently in transport are not intended for sale, but rather for production which would subsequently increase economic activity.
By following the BDI, an investor can get a sense of the future direction of the global economy. To get a daily quote and historic price chart, you can visit the Bloomberg BDI page here.
2.) Cross-Border Deposits
Cross-Border Deposits are those made across borders to other countries. Intuitively, a country with a surplus of capital is viewed to be in a more healthy economic state than one who has a deficit of capital. Additionally, a positive indicator to the health of an economy is when the country is receiving an influx of money. One probable cause of this might be higher interest-rates whereby investors can earn a higher rate of return in that country. For instance, Australia, with interest rates at 3.75%, attracts more foreign investment than countries with lower interest rates such as Japan, with an official rate set at 0.1%. To check out the statistics on cross-border deposits, click here.
No comments:
Post a Comment