 |
 TestTestTestTestTestTestTestTestTest |
 |
|
|
 |
|
|
| Fundamental Analysis |
Fundamental analysis refers to a research on basic core elements of the economy of political system. It is a research method and a tentative price-predicting activity. It predicts market trend through analyzing economic indexes, governmental policies or social elements under a commercial cycle. Many state financial organizations, trading unions or multinational companies consider many elements, such as social, political and economic influence, and analyzing based only on a theory chart with great fluidity is rather risky. Meanwhile, as you probe into more and more deeply the complexity and subtlety of market basic principles, you will find an immeasurable increase in knowing and understanding dynamic global market. Basic principle analysis is a very effective method in predicting economic environment rather than exact market prices. For example, when you analyze an economist’s prediction on a coming GDP or employment declaration, you begin to have a clear picture of generalized healthy development of economy and understand that driving force is working. Bargainers who apply basic principle analysis in market research will form many models to explain a transaction strategy. These models will typically be used in estimating future market value and prices through a lot of experiential data, trying to estimate market activities and analyzing former core economic indexes. The theoretical information can be used to conclude some kind of transaction in which this kind of information can be best applied. Estimating models are various and of great amount and are created by bargainers and market participants. Two completely different conclusions can be made on the same accurate data on how the market will be influenced by the data. Therefore, it is important that before forming your transaction style based on some kind of market analyzing model, you should learn basic principles and understand how they can suit your transaction style and expectation. For foreign exchange bargainers, basic principles reflect changes of financial organizations of a country from interest rates and central bank policy to natural disasters. Basic principle is a dynamic combination covering apparent plans, changing activities and unpredictable incidents. Therefore, compared with listing precisely all integrated basic principles, it is best to grasp the most influential elements out of various combined elements.
Main Common Economic Indexes Most of economic indexes can be divided into leading indexes and lagging indexes. l Leading indexes change before the economy follows a model or trend. They are used to estimate economic changes. l Lagging indexes change after the economy follows a model or trend. Usually we pay attention to main economic indexes. When we pay attention to the influence of an economic index on market price, foreign exchange is the most challenging one that generates the biggest profit potential. One important method to evaluate the situation of an economic entity is to trace problems of special economic situations of every country. This is a tough work. Main Indexes Gross National Product (GNP) - the sum of products and services produced by domestic or overseas companies. GNP shows the pace of economic increase (or decline) and is considered to be a most important index economic output and growth power. Industrial Productivity - it is a consecutive weighting measurement on of the industry, mining industry and productivity change of human services of a country. It equally measures their industry productivity and the utilizable resources in mining industry and public services (usually refers to utilization efficiency). Manufacturing industry influences 25% of economy. Utilization efficiency provides an evaluation of level of the utilized productivity power. Purchase Management Index - National Association of Purchasing Management (NAPM), which is now called Institute for Supply Management, declared monthly aggregative index, including domestic manufacturing industry situation and new order forms of building construction, production, delivery times of suppliers, orders, stock, price employment, export order forms and import order forms. It is manufacturing industry divided by non manufacturing industries. Product Price Index (PPI) - It shows price changes in manufacturing industry. It measures averaged changes in selling prices. Selling price means reproduction at product prices accepted by domestic producers. This includes manufacturing industry, mining industry, agriculture and electricity industry. Usually the PPIs used in economic analysis are those finished goods, semi-finished products and rough materials. Consumption Price Index (CPI) – It is averaged price of everyday foods and services paid by urban consumption (80% of population). It reports more than 200 kinds of changing prices. CPI usually includes users’ commission charge and tax, which are related to the price of a specific product or service. Durable Product – Durable product order form index is used to measure the number of order forms that domestic manufacturers have for goods that are delivered immediately or in the future. For a durable product, its service lifetime is supposed to be over three years during which service for it is continuous. Employment Cost Index (ECI) – measurement of job quantity provided by over 500 industries in all states and 255 districts. Employment estimation is based on market adjustment of large enterprises. Besides, the number of full-time and part-time employees in domestic enterprises and governments is counted. Retail Sales – It is a real-time index relating to consumers’ main consumption mode. It is adjusted along with change in seasons, holidays and transaction days. Retail includes durable product sales and non durable product sales, service and tax on these products. Sales tax born by consumers is not included. New Building Report – It measures the number of newly-built residential buildings per month. The beginning of a construction is the foundations digging and construction mainly refers to residential buildings construction. Residential building is the first element to react to interest rate changes. Its reaction to interest rates, if it is shown in graphics, is the part of peak near the bottom. Reports on ratio of price changes of current month are out in the middle of next month. |