Question

In investment, the analysis for Global market, domestic market, and industries is necessary for a top-down investor. What would be a good indicators for the investor to understand current global economic standing? Note that provided at least three indicators.

Answer 1

Top down investing approach is most important through looking at the macro perspective of investment as it will be trying to look at the macro picture of the economy before investing into a particular company, So, three indicators which can be used by investor to understand the current Global economic standing are as follows-

A. Monetary policy all across the globe can be a better indicator in regards to understanding the current economic scenario because monetary policy are constantly changed as per the demand and the need of the economy and currently it is signalling towards a quantitative easing policy and the need for stimulation of demand.

B. Dollar index in respect to the currencies of various markets- the significance of dollar index can never be ignored as dollar index will be reflecting the state of the global economy and the exchange rate of other currencies in respect to American Dollars and when there will be a strength of dollars returning, it would mean that the investors are sceptical about investment into emerging Markets and other countries.

C. Growth of gross domestic product of different countries is another indicator which will be reflecting upon the growth of various countries and the expected growth of various countries in different quarters and it would be providing with a better idea about the Global economic picture.