THE INFLUENCE OF INTELLECTUAL CAPITAL TO STOCK MARKET PERFORMANCE IN BALTIC COUNTRIES DURING FINANCIAL CRISIS MPhil Jaroslaw Godyn Riga 10-12 November,

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Presentation transcript:

THE INFLUENCE OF INTELLECTUAL CAPITAL TO STOCK MARKET PERFORMANCE IN BALTIC COUNTRIES DURING FINANCIAL CRISIS MPhil Jaroslaw Godyn Riga November, University of Latvia

Agenda Financial crisis reasons Baltic states situations Intellectual Capital Value of IC Relation of IC and stock performance

Financial crisis reasons Low cost of capital Financial leverage Deregulation in financial sector Bubbles Information assymetry bull market comes when pessimism is dominate on market, grow on skepticism, matures on optimism and die when there is euphoria

Public deficit and public debt as % of GDP Source: Own elaboration based on data from European Central Bank, Statistics Pocket Book, 2010, pp.45-46

Baltic states situations AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ Source: Valerie Plagnol. European bond markets in the financial crisis: an endurance test, CMCICS, March 26, 2010, 7p.

CDS price Estonia Lithuania Latvia Poland Sweden Finland Source:Own elaboration based on data from Bloomberg Ger/Den

Market cap in Baltic States in bln of euro Source:Own elaboration based on data from Bloomberg Decline in the value of capitalization (%) in the Baltic area in the period

Market cap share Source:Own elaboration based on data from Bloomberg

Relation of stock market cap to GDP (%) Source: Own elaboration based on data from Trading Economics

The scale of decline in major stock indices Source: Own elaboration based on data from Bloomberg

Change the value of intellectual capital Source: Own elaboration based on data from Bloomberg

The share of the exchanges in the total value of intellectual capital Source: Own elaboration based on data from Bloomberg

The value of IC in a millions of euro and a rate of return (%) in 2008 Source: Own elaboration based on data from Bloomberg

The value of IC in a millions of euro and a rate of return (%) in 2008 Source: Own elaboration based on data from Bloomberg

Relation of averaged rate of return and the value of IC in 2008 Source: Own elaboration based on data from Bloomberg

Summary The value of total IC for the Baltic region decreased from 1370bln euro to 208bln euro, its about 85% fall A significant decline in the value of intellectual capital was recorded in the second half of 2008 Analyzing the relationship of changes in volume of intellectual capital and return on shares in the period in the region, we have noticed some accuracy that intellectual capital and rate of return from shares tend to go the same direction.

Thank You