- Class Number 3276
- Term Code 2930
- Class Info
- Unit Value 6 units
- Mode of Delivery In Person
- Prof Takeshi Yamada
- Prof Takeshi Yamada
- Class Dates
- Class Start Date 25/02/2019
- Class End Date 31/05/2019
- Census Date 31/03/2019
- Last Date to Enrol 04/03/2019
This course provides an overview of current Asian capital markets. The growth of Asian economies has been spectacular in the past 60 years; the advancement of Japan from the 1950s until the beginning of 1990s, the emerging Asian Tigers (Hong Kong, Korea, Singapore, Taiwan) in the 1980s, and the rapid transformation and growth of China and India since the 1990s. Asian capital markets are quite diverse as they consist of emerging markets at different stages of development as well as mature markets. Therefore, it is not easy to view Asian capital markets through a single lens. However, this course not only introduces students to capital markets in various Asian countries but also attempts at introducing a unified conceptual framework to understand markets in these countries. The framework focuses on institutional environments (such as legal systems) in different countries and their impacts on corporate behaviour. We also present empirical evidence that such a framework might not necessarily explain the recent developments in China and India. Two of the important features in Asian capital markets, which contrast those of capital markets in UK-US, are the roles played by the State and closely tied families, which we will discuss in detail. The globalization of the world economy in the past two decades has affected the developments of Asian capital markets. Although our course may discuss the development of capital markets of individual countries, we will discuss Asian economies in the global context and will explore the increasing weight of Asia in the world economy.
Upon successful completion, students will have the knowledge and skills to:
Upon successful completion of the requirements for this course, students should have the knowledge and skills to:
- Provide an overview of Asian economies and currency system
- Demonstrate the conceptual framework for understanding financial markets and institutions
- Be able to read academic articles
- Demonstrate a familiarization with financial and corporate governance data analysis
- Demonstrate a vision for the future of Asian capital markets and economies
Students will be introduced to research using readings from academic journals. Based on recent research in law and economics, the course introduces a conceptual foundation to analyze financial markets. Also, the students are expected to read and extract the essence of research papers that use empirical methods.
(*) indicate required readings. (ref) indicate reference readings. Please click the link to download the articles. All other required and reference readings are uploaded on Wattle.
Link is provided below for those on internet. Others are either available in the library or uploaded to wattle.
- Global imbalance and Asia’s economy
- (*)Charles Adams and Donghyun Park, 2009. Causes and Consequences of Global Imbalances: Perspective from Developing Asia. Asian Development Review, vol. 26, no. 1: 19-47. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1611424
- (*)Martin S. Feldstein, 2008. Resolving the Global Imbalance: The Dollar and the U.S. Savings Rate. Journal of Economic Perspectives, vol. 22(3), pages 113-25, Summer. http://www.nber.org/papers/w13952
- (ref) Guonan Ma and Wang Yi, 2010. China’s High Saving Rate: Myth and Reality. BIS Working Paper No. 312 http://www.bis.org/publ/work312.htm
- Asia’s currency issue
- (*)Michael P. Dooley, David Folkerts-Landau, and Peter Garber, 2004. The Revived Bretton Woods System. International Journal of Finance and Economics, vol. 9: 307–313.
- (*)Jeffery Frankel, 2011. Historical Precedents for the Internationalization of the RMB. Council on Foreign Relations Working Paper. http://www.cfr.org/china/historical- precedents-internationalization-rmb/p26293
- Asia’s financial centres
- (ref)Joshua Felman, Simon Gray, Mangal Goswami, Andreas Jobst, Mahmood Pradhan, Shanaka Peiris and Dulani Seneviratne, 2011. ASEAN5 Bond Market Development: Where Does it Stand? Where is it Going? IMF Staff Papers. WP/11/137. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1869546
- (* )Executive Summary, Sections I and II: from page 1 to page 59) Michael R. Bloomberg and Charles E. Schumer (City of New York and United States Senate), 2007. Sustaining New York’s and US’ Global Financial Services Leadership. http://www.nyc.gov/html/om/pdf/ny_report_final.pdf
- (ref) Global Financial Centres Index http://www.longfinance.net/images/GFCI18_23Sep2015.pdf
- Law and finance: A framework for understanding stakeholders and governance of Asian firms
- (*)Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer and Robert W. Vishny,1998. Law and Finance, Journal of Political Economy, vol. 106, no.6, pp.1113-1155.
- Law and finance: Global and Asian evidence
- (*)Stijn Claessens, Simeon Djankov and Larry H.P. Lang, 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, vol. 58, pp.81-112
- (ref) Rafael La Porta, Florencio Lopez-De-Silanes, and Andrei Shleifer, 1999. Corporate Ownership around the World, Journal of Finance, vol. 54, no.2, pp. 471-517.
- (ref) Rafael La Porta, Florencio Lopez-De-Silanes, Andrei Shleifer and Robert W. Vishny, 1997. Legal Determinants of External Finance, Journal of Finance, vol. 52, no.3, pp. 1131-1150.
- State capitalism 1
- (*)Andrei Shleifer and Robert R. Vishny, 1998. Perspectives of Government. Chapter 1 of The Grabbing Hand: Government Pathologies and Their Cures, Harvard University Press ISBN 0674010140
- (*)The Visible Hand, Special Report: State Capitalism, 2012. The Economist, Jan. 21.
- (*) Jianping Deng, Jie Gan, and Jia He (2011) Political Constraints, Organizational Forms, and Privatization Performance: Evidence from China, working paper. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=970056
- State capitalism 2
- (*)Allen, Franklin, Jun Qian and Meijun Qian (2005) Law, Finance, and Economic Growth in China. Journal of Financial Economics 77: 57-116.
- Family capitalism
- (*) (from Lecture 5) Stijn Claessens, Simeon Djankov and Larry H.P. Lang, 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics, vol. 58, pp.81-112
- (*)Mara Faccio, Larry H. P. Lang, and Leslie Young (2001) Dividends and Expropriation, American Economic Review, Vol. 91 No. 1: 54-78.
- (ref) Michael L. Lemmon and Karl V. Lins (2003) Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis. Journal of Finance, Vol. LVIII, No. 4: 1445-1468.
- (ref) Asian Family Business Report (2011) Credit Suisse Research Institute http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=88E4D28A- 83E8-EB92-9D56EA529104BFC2
- Informal financial sector and South Asia
- (*) Allen, Franklin, Rajesh Chakrabarti, Sankar De, Jun Qian and Meijun Qian (2012) Financing Firms in India, Journal of Financial Intermediation Vol. 21 401-445.
- (ref, especially Section 7 on informal sector) Allen, Franklin, Rajesh Chakrabarti, Sankar De (2007) India’s Financial System. Working paper. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1261244
- Corporate groups
- (*) Kee-Hong Bae, Jun-Koo Kang and Jin-Mo Kim (2002) Tunneling or Value Added? Evidence from Mergers by Korean Business Groups. The Journal of Finance, Vol. 57, No. 6, pp. 2695-2740
- (ref) The Benefits and Costs of Keiretsu Financing. Chapter 6 of Takeo Hoshi and Anil Kashyap (2001) Corporate Financing and Governance in Japan. The MIT Press, Cambridge MA, ISBN 0-262-08301-9
- (*) Mark Scher (2001) Bank-firm Cross Shareholding in Japan: Why is it, Why does it Matter, Is it Winding Down? DESA Discussion Paper No. 15, United Nations http://www.un.org/esa/desa/papers/2001/esa01dp15.pdf
- Global Financial Crisis and lessons from the Japanese Financial Crisis of the 1990s
- (ref) Takeo Hoshi and Anil K. Kashyap (2010) Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan. Journal of Financial Economics 97 398–417.
- (*) Richard Koo and Masaya Sasaki (2010) Japan’s Disposal of Bad Loans: Failure or Success? – A Review of Japan’s Experience with Bad Debt Disposals and its Implications for the Global Financial Crisis – NRI Papers No. 151. http://www.nri.co.jp/english/opinion/papers/2010/np2010151.html
- (*) Richard Koo (2011) The World in Balance Sheet Recession: Causes, Cure, and Politics, Real-world Economics Review No. 58 http://www.paecon.net/PAEReview/issue58/Koo58.pdf
Regularly reading business newspapers are strongly recommended, such as Business Times (Australia), Financial Times (London), Wall Street Journal (USA). Bloomberg and Yahoo-Finance are good free sources on the internet.
Consultation time will be confirmed at the start of the semester.
Students will be given feedback in the following forms in this course:
- Feedback will be given verbally or by written comments (for project), both to individuals as well as to project groups
ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. The Surveys and Evaluation website provides more information on student surveys at ANU and reports on the feedback provided on ANU courses.
Your final mark for the course will be based on the raw marks allocated for each of your assessment items. However, your final mark may not be the same number as produced by that formula, as marks may be scaled. Any scaling applied will preserve the rank order of raw marks (i.e. if your raw mark exceeds that of another student, then your scaled mark will exceed the scaled mark of that student) and may be either up or down.
Support for Students
The University offers a number of support services for students. Information on these is available online from http://students.anu.edu.au/studentlife/
|Week/Session||Summary of Activities||Assessment|
|1||Introduction Asia’s economy and global imbalance Asia’s economic growth Global imbalance and its cause|
|2||Asia’s currency issue Bretton Woods System II Capital controls and liberalization Road to convertibility: Chinese Yuan|
|3||Asia’s financial markets Asian markets in the global portfolio: Equity and bond markets Currency market Can Asia embrace global financial centres? China’s segmented equity market|
|4||Law and finance: A framework for understanding stakeholders and governance Textbook finance vs. reality Law and finance|
|5||Law and finance: Global and Asian evidence Who controls Asian firms? Shareholder rights: cash-flow rights and voting rights Ownership concentration External finance||Group project workflow due|
|6||State capitalism Part 1: Asia’s growing sovereign economic power State capitalism State owned enterprises (SOEs) and privatization Market incentives and state objectives Government control of partially privatized SOEs The impact of state on market and firms|
|7||State capitalism Part 2: China’s growth puzzle|
|8||Family capitalism Family control around the world Growth of family business in Asia Is family business a good organizational structure? US example: diversified ownership and good legal environment Asian firms: concentration of control and expropriation|
|9||Informal financial sector and South Asia (India) India’s development and financial markets Financing Indian corporate firms Corporate groups and informal financing Microfinance|
|10||Corporate groups Korea: Chaebol Tunnelling Japan: Keiretsu Main bank system Cross-shareholding|
|11||Global Financial Crisis and lessons from the Japanese Financial Crisis of the 1990s The Japanese asset price bubble in the 1990s Bank crisis De-levering of firms and recession||Group project deadline|
|12||Wrap up and left-over topics: Tale of two cities: Hong Kong and Singapore Wrap up|
|Assessment task||Value||Due Date||Return of assessment||Learning Outcomes|
|Group Project on Stock Selection (plan)||0 %||29/03/2019||05/04/2019||2,3,4,5|
|Group Project on Stock Selection||35 %||20/05/2019||05/06/2019||2,3,4,5|
|Final Examination||65 %||06/06/2019||04/07/2019||1,2,3|
* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details
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Moderation of Assessment
Marks that are allocated during Semester are to be considered provisional until formalised by the College examiners meeting at the end of each Semester. If appropriate, some moderation of marks might be applied prior to final results being released.
Assessment Task 1
Learning Outcomes: 2,3,4,5
Group Project on Stock Selection (plan)
See Assessment Task 2 for the group project details.
One A4 page work flow plan to be submitted after group is formed and before the end of Week 5 (29 March). Feedback will be given.
Assessment Task 2
Learning Outcomes: 2,3,4,5
Group Project on Stock Selection
(For more details, please see slides presented in class and uploaded on Wattle)
1. Assume that you are a consultant firm to design an investment strategy for a professionally managed portfolio in Asian securities.
2. Your assignment is to design an investment strategy for the fund manager who is going to buy and sell individual securities for his/her portfolio.
3. Portfolio strategy must be a conceptual framework for a fund manager that sets its investment policy for a long-term horizon, rather than recommending certain securities to trade at certain timing.
4. Please report below:
– Three Asian stocks a fund manager might select based on your strategy.
– Three Asian stocks a fund manager might want to avoid based on your strategy.
– Choose stocks that are among the largest 10 stocks in terms of market capitalization in each country.
• You may include more than one stock from a country in your portfolio.
– Summarize why the fund manager might chose each stock
5. You must consider what you learn from the course. As you learn more as you proceed in this 11-lecture course, you must discuss and assess your ideas continuously throughout the course with your group mates until you submit the report on the due date.
6. You can use any resources in the library or the web. Most essential information will be included in the financial statement of individual firms.
7. Report must be not more than 3000 words. Please format the document as a professional consultancy report. You may include an Appendix up to three A4 pages.
1. Group size will be determined in Week One based on class size.
2. All students must form groups on Wattle. The group leader must send one email with the names of all the group members before the beginning of class in Week Three.
3. Anyone not in a group according to those emails from group leaders will be randomly allocated to groups by the next day.
4. The group leader becomes responsible for submitting the group assignment.
The project will be based equally on following rubrics:
1. Strategy: Uses concept from class adequately
2. Logic: Consistency and persuasiveness
3. Presentation: Clarity of presentation
Word limit (where applicable): No more than 3000 words (excluding appendix which has a limit of 3 pages)
Assessment Task 3
Learning Outcomes: 1,2,3
The final examination (2 hours duration plus 15 min reading period) will be based on all the work covered throughout the duration of the semester. The final examination is worth 65% of the overall course grade. To do very well in the examination, you would need to have accessed the required readings of the course. Students will be provided with further details regarding the exam as it approaches.
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The group assignment will be submitted online in Wattle.
No submission of assessment tasks without an extension after the due date will be permitted. If an assessment task is not submitted by the due date, a mark of 0 will be awarded.
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The feedback will be returned by email.
Extensions and Penalties
Extensions and late submission of assessment pieces are covered by the Student Assessment (Coursework) Policy and Procedure. The Course Convener may grant extensions for assessment pieces that are not examinations or take-home examinations. If you need an extension, you must request an extension in writing on or before the due date. If you have documented and appropriate medical evidence that demonstrates you were not able to request an extension on or before the due date, you may be able to request it after the due date.
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Resubmission of assignments is not permitted.
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- ANU Counselling Centre promotes, supports and enhances mental health and wellbeing within the University student community.
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Asset pricing and corporate finance, particularly focusing on Asian financial markets and institutions.
Prof Takeshi Yamada