Economic growth and company stock pricing in the global stock market

Abstract

The current paper creates a fundamental framework for studying stock pricing within the global stock market and beyond. The matters of asset pricing in general and stock pricing in particular within the global stock market have not been discussed and researched thoroughly enough thus far. While certain aspects, like correlation and interdependence between national stock markets represented by respective indexes, have been discovered and studied, the foundations and many other aspects have largely been omitted. Among these omitted subjects are the nature and reasons of stock price movements for long, medium and short terms, the fundamental differences of price movement for different asset types, pricing differences between the global, regional and local stock markets. These subjects are largely connected to each other, to inherent qualities of various assets, fundamental economic laws and, to a certain extent, to economic growth. In order to research them successfully, those need to be tied together within a single approach, which would result in defining and clarifying the basic principles of stock pricing for the global stock market, which can also be extended to include other asset types as well. This would lay a framework for conducting further, deeper studies as well as clarifying and even correcting the existing ones. The present article aims to accomplish that goal and thus assist the creation of a more comprehensive, unified approach towards stock pricing within the context of economic growth and beyond, which could be used by both researchers and stock market specialists.