Speculative Activity Research Articles

NAČELO ZAŠTITE LEGITIMNIH OČEKIVANJA U UPRAVNOM PRAVU EUROPSKE UNIJE I PRAVNA AUTONOMIJA DRŽAVA ČLANICA

Protection of legitimate expectations is a general principle of European Union law that has been developed through the case-law of the Court of Justice of the European Union. There are several unresolved issues that have been pointed out by the analysis of the said case-law. These are inter alia: When is the European Union legislator bound by legitimate expectations generated by a preceding piece of (changed) legislation, when does the preceding administrative practice generate legitimate expectations; the issue of the lack of legitimacy in case of speculative activities, the issue of differentiation between unlawful decisions and unlawful representations in generating legitimate expectations. Other issues concern the relation between the European Union law and the Member States’ legal autonomy concerning the possibilities for unlawful administrative acts to generate legitimate expectations and the expiration of the time-period prescribed by national law for revocation of unlawful administrative decisions beneficial for a party concerned. In the latter case, a Member State may not plead national administrative rules in order to justify its failure to comply with the principle of effectiveness of European Union law. The aim of this paper is to analyse these issues and determine whether the regulatory framework of the European Union can be improved in order to avoid potential problems in practice. The analysis is based on the case-law of the Court of Justice of the European Union and legal acts of the European Union along with Croatian and foreign literature on administrative, constitutional and European law. These issues illustrate the deficiencies of the current legal framework of the European Union with a number of applicable legal sources and ate the same time they emphasise the need for a codification of administrative procedure on the Union level. There have been several initiatives in this respect but with no real effect, even though there is a legal basis for such an endeavour prescribed by the Treaty on the Functioning of the European Union. Such a codification should prohibit unlawful administrative acts from generating legitimate expectations. This would also resolve the issue of different treatment of national administrative decisions that may not generate legitimate expectations. Furthermore, unclear and arbitrary interpretations should be avoided, as in the case of speculative activities the existence of which is not easy to determine. Finally, application of different criteria in different areas of law should be avoided if there is no basis therefor in the Treaties.

Speculation and volatility—A time‐varying approach applied on Chinese commodity futures markets

Experts have long discussed and empirically investigated whether speculative activity increases volatility on commodity futures markets. Little empirical research, however, analyzes the role of speculators on commodity futures markets in China. Using time‐varying vector autoregression models with stochastic volatility, this paper investigates for four heavily traded metal and agricultural contracts, how the relationship between returns volatility and speculation evolves over time. Our findings indicate that speculative activity has little to no impact on volatility. On the contrary, for all commodities examined, returns volatility seems to amplify speculation.

Macroeconomic Determinants and Mortgage Debt Accumulation: Evidence from Malaysia

The statistics of the household debt in Malaysia is among the highest in the ASEAN region with the biggest portion of the household debt goes to pay off the mortgage debt. As accommodation is one of the basic needs required by all households regardless of the price offered, concerns are given to the household affordability to live in a decent economy. The escalating trend of household debts related to mortgage is due to the increase in house prices, fluctuation in interest rates and speculative activities taken by investors. Thus, the aim of the study is to examine the relationship of principal drivers on mortgage debt accumulation using macroeconomic determinants. The macroeconomic determinants were represented by house price index (HPI), interest rate (IR), gross domestic product (GDP) and living cost (LC). The data set was analyzed between the period of 2006 till 2016 on a quarterly basis. Multiple regression analysis was applied to test the statistical relationship between the macroeconomic determinants and the mortgage debt. Several diagnostic tests also being conducted to ensure that the proposed model in this study adequately describes the time series under consideration. The empirical findings revealed that the accumulation of mortgage debt in Malaysia is driven primarily by three key factors: house price index, interest rate, and living cost. The living cost has been identified as the most significant factor that leads to high accumulation of mortgage debt in Malaysia. However, income (which is represented by GDP) does not give any significant impact towards the accumulation of mortgage debt. This implies that capital appreciation in the property market has made households stretch out their mortgage financing to own a house to fulfill their basic needs; without considering their level of income. The implication of this study is critical to deliberate for further analysis as easy access to mortgage debt may lead to default or sub-prime crisis. By understanding the principal macroeconomic drivers that influence the accumulation of mortgage debt, this would contribute to the body of knowledge, and subsequently the legislator who can take the necessary actions to mitigate the issues of escalating prices in the property market, and how best to balance between the macroeconomic policy and the related policies designed to stabilize the housing market, and to contain the mortgage debt from upward bubbling.

Resilience and housing markets: Who is it really for?

Ten years after the Global Financial Crisis, this research examines how resilience theory and rhetoric relating to the economy and housing markets has been translated into policy and practice. The methodology involves a case study of a city (Auckland) with a nationally dominant housing market and high unaffordability. Via secondary literature and a series of interviews we analyse questions connected to resilience from what, how, by whom, and discuss the implications and limits of the approach. The research demonstrates that resilience policies have focused on providing institutional stability to shock, rather than adaptation or transformation to a state that is less exposed to the systemic risks associated with flows of global capital, debt, and speculative activity. This is related to how the whole concept is vaguely defined. In the absence of guidance, institutions reinterpret resilience in a way that underpins existing market and regulatory logics, such as by increasing capital reserves or lending ratios. As a consequence, the dominant political economy, selected institutions, and to an extent, existing homeowners and speculative investors are privileged in resilience policy. By bringing these selectivities and limits to light we argue for a shift in focus away from an institutional frame to one with a deeper understanding of both the balance of an economy and the wider forces that create and reproduce housing markets.

Forecasting oil futures market volatility in a financialized world: Why speculative activities matter

We analyze the relation between volatility and speculative activities in the crude oil futures market and provide short-term forecasts accordingly. By incorporating trading volume and opening interest (speculative ratio) into the volatility dynamics, we document the subtle interaction between the two measures of which the volatility-averse behavior of speculative activities plays a considerable role in the market. Moreover, by accounting for structural changes, we find significant evidence that this behavior currently becomes weaker than in the past, which implies the oil futures market is less informative and/or less risk-averse in recent time period. Our forecasts based on these features perform very well under the predictive preferences that are consistent with the volatility-averse behavior in the oil futures market. We provide discussions and policy inferences.

Why Are Warrant Markets Sustained in Taiwan but Not in China?

This paper uses moment analysis, capital asset pricing model (CAPM) statistics, stochastic dominance (SD) test, and volume analysis to investigating why the market for Taiwan warrants can be sustained but not in China. Our moment analysis shows that buying in China warrants has a higher likelihood of losses. Our CAPM analysis shows that both the Sharpe ratio and Jensen index for warrants from the Chinese market are too negative. The Treynor index shows that Chinese warrants are highly volatile. Our SD analysis shows that risk averters prefer to invest in Chinese warrants compared to Taiwanese warrants, implying that the warrant issuers prefer to issue Taiwanese warrants than Chinese warrants. Using volume analysis, the Chinese warrant market is much more active, implying more speculative activities in China than in Taiwan. All the above could lead to China’s decision to close its warrant market. The findings in the paper are useful for academics, investors, and policy makers.

The role of the enhanced carry to risk on currency policy: the Mexican Peso

ABSTRACTOne of the most common measures of carry trade attractiveness is the carry-to-risk ratio. On analysing the speculative activity, this ratio presents two issues: First, emerging market currencies could merit a legitimate risk premium in a carry trade strategy due to the sovereign risks involved. In order to correct the measure, we include the credit risk in the measure using credit default swaps. Second, we gather more information about potential volatility asymmetries including a directional speculation indicator known as the risk reversal. We prove that the enhanced measure for the Mexican peso (MXN) is well represented by an ARIMA model with appropriate features since 2009. Due to the output of the analysis, we deduce that the Bank of Mexico might use this measure or a similar indicator, not only to understand the attractiveness of the carry trade strategy but to curb destabilizing carry trade activities. The case is compelling for the Mexican peso due to its dual role as emerging market currency and full convertible currency. We conclude that this institution may effectively manage the enhanced carry-to-risk measures in order to achieve financial stability and proper exchange credibility, and recognize its potential utility for other central banks.

La contabilidad financiera como motor de la redefinición de la concepción de empresa

El predominio de la financiarización económica ha otorgado prevalencia a un concepto de empresa según el cual el accionista, la gestión financiera y la generación de valor emergen como elementos determinantes de las relaciones entabladas entre los agentes organizacionales. La reproducción de esta concepción en economías que carecen de estructuras financieras robustas constituye el centro de estudio del presente artículo. En este sentido, el trabajo explora el declive del sector industrial y el ascenso del sector financiero en Colombia. Asimismo, se identifica el surgimiento de tensiones entre la realidad organizacional y el ambiente institucional, por cuenta del ascenso de la concepción financiera de la empresa, en detrimento de la concepción orgánica de esta. El estudio concluye que estas tensiones son superadas con la ayuda de un isomorfismo institucional en el que las modernizaciones contables interpretan un papel central, puesto que insertan a la realidad organizacional un conjunto de técnicas y racionalidades afines a actividades especulativas.

A Review on the Economic Instability and Derivative Market of Pakistan

This study covers the different problems of derivative market in Pakistan. Economic instability is the main constraint of derivative market in Pakistan. Due to instable economic conditions and restricted environment, corporate sector has not reflected significant participation in derivative market of Pakistan. Lack of infrastructure, political instability, ineffective governance, inexperience and unaware market participants are the other problems of Pakistan derivative market. Hence, literature is reviewed and analyzed due to unavailability of appropriate data for this study. Findings of the study have suggested that derivatives are an effective risk mitigating tool on one hand whereas on the other side, highly speculative activities in derivative market may be harmful for the financial markets and economic growth. In Pakistan perspective, all the players of financial market have adopted adequate risk mitigating strategies to avoid any adverse market scenario. Speculative activities are highly restricted due to economic instability as Pakistan is not in a position to absorb any financial shocks or crisis. The main regulatory authorities of this particular market are State Bank of Pakistan (SBP) and Security and Exchange Commission of Pakistan (SECP). These regulators are keenly observing market and taking necessary actions to prevent any adverse conditions. However, in developing economies these complex instruments create new risks which are badly affecting the whole economy.

EFFECTIVE CROSS HEDGING: EVIDENCE FROM PHYSICAL CRUDE PALM OIL AND ITS INTER-RELATED AGRICULTURAL FUTURES CONTRACTS

Since its establishment, Crude Palm Oil futures contract (FCPO) has been used to directly hedge its physical crude palm oil (CPO). However, due to the excessive speculation activities on crude palm oil futures market, it has been said to be no longer an effective hedging tool to mitigate the price risk of its underlying physical market. This triggers the need for market players to find possible alternatives to ensure that the hedging role can be executed effectively. Thus this investigation attempts to examine whether other inter-related grains and oil seed futures contracts could serve as effective cross-hedging mechanisms for the CPO. Weekly data of inter-related futures contracts from Chicago Board of Trade (CBOT) and Dalian Commodity Exchange (DCE) are employed to cross hedge the physical crude palm oil prices. The study starts from 2006 until 2016. Empirical results indicate that FCPO is still the best futures contract for hedging purposes while Chicago Soybean (CBOTBO) provides second best alternative if cross-hedging is considered.
 Keywords: Crude palm oil, Crude palm oil futures, Cross Hedging, Optimal Hedge Ratio, Effective Hedging

State Control Versus Hybrid Land Markets: Planning and Urban Development in Transitional Hanoi, Vietnam

During the post-reform period since 1986, land-use systems in Vietnam have been reformed in terms of the regulation of land markets and the built environment. This study analyzes the changing role of urban planning and the policy of state intervention in land markets to manage spatial changes in Vietnamese cities. Theoretical and empirical approaches are used to analyze urban development and planning practices in Hanoi. The study further describes the constraints of planning systems in hybrid land markets that include both formal and informal land development. We argue that in Vietnam, where the role of the state in market construction has not been fully developed and land market institutions are incomplete, urban planning is used as a passive tool of state control and is no longer relevant to the process of spatial development, which is driven by the speculative activities of interest actors. This situation challenges state regulations for the effective management of spatial resources. The empirical results suggest the utility of further reforms to the land-use system and planning institutions in Vietnam, and of strengthening the capacity of the state in land administration.

The Sustainability Cross Compliance of the Commodities Market in its Relationship with Derivative Financial Instruments

Over the past decade, agricultural commodity prices underwent wild swings. Periods of high growth in 2008 were followed by periods of sudden decrease in 2009. The excessive increase in food price volatility is a subject of great interest because it has to do with the survival of mankind. Recent academic studies and policy makers have reached sharply different conclusions about the dynamics of such fluctuations. Also, some of them have indicated the main cause in speculative transactions and in the little regulation of futures markets. This paper analyzes weather agricultural price increases are due to increased speculative activity or to factors relating specifically to the commodities markets. The results of analysis do not show a direct relationship between the increase in speculative transactions and spot prices, rather a more developed future market can be of benefit also to spot prices, as argued in many academic studies.

Round Number Effects in Crude Oil Futures Market

Using the entire tick data for West Texas crude oil from 1996 to 2015, we find excess buying (selling) at price points just below (above) a round number over both pre- and post-electronic periods, confirming the existence of round number effects in commodity futures market. Next, we examine whether the trading activity of hedgers or speculators influence round number effects and find that the trading activity of hedgers influence round number effects. We also examine the relation between round number effects buy-sell imbalance and 24-hour trade return. We find that the relation is negative in crude oil futures market and a trading strategy based on round number effects generates the return of negative 0.0014 percent. Our result conflicts the finding of previous literature who documents strong evidence that there is positive relation between round number effects buy-sell imbalance and 24-hour trade return and show that a strategy based on round number effects generate a positive return of 0.11 percent in US stock markets. Lastly, controlling for market liquidity and volatility, we examine whether round number effects persist and find that round number effects persist. Additionally, given that speculation activity in commodity futures market has been the subjective of intense scrutiny since the boom and bust in commodity prices in 2008, we examine the impact of trading activity of speculators on commodity market. We find that speculators provide liquidity to hedgers and find no evidence that the trading activity of speculators increase market volatility.

The Fama and French Three-Factor Model in Developing Markets: Evidence from the Chinese Markets (1995-2008)

We study the Fama and French three-factor (FF-3F) model in relation to a developing market. To this end, we consider Chinese stock markets over the period 1995–2008, which is to say, over a period when these markets are recognized as “developing” markets influenced by speculative activity. We find that the model appears to be working as a form of “principal component analysis” for the determinants of stock price formation with book-to-market (B/M) as the “variable of choice” on account of that it captures the earnings-to-price (E/P), cash-flow-to-price (C/P) and sales-to-price (S/P) variables while remaining largely uncorrelated with firm size (whereas E/P, C/P and S/P are themselves positively correlated with firm size). The variables, however, are unrelated to risk as represented by market exposure, volatility, or leverage.

Entrepreneurial discovery in property market processes

PurposeThis purpose of this paper is to introduce property researchers to the principles of Austrian economics and to consider their methodological relevance and potential for understanding the dynamics of property market processes.Design/methodology/approachThis paper sets out the basic principles of the Austrian economics thesis, including an outline of the entrepreneurial discovery approach to market processes, a core precept of the Austrian thesis. It then relates the core assumptions of the Austrian school to the workings of the property market.FindingsIt is argued that the driving force of property market process is provided by the entrepreneurial and profit-seeking speculative activities of human agents as they are confronted with incomplete information in an uncertain property market context. Thus, Austrian economics offers a sound and practical alternative theoretical approach to the study of property market, which places the market within its socio-economic context.Originality/valueIn-depth examination of the provisions, assumptions, philosophical orientation and limitations of the Austrian tradition of economic thought toward a better understanding of the workings of the property market.

Price volatility and speculative activities in futures commodity markets: A combination of combinations of p-values test

The present study investigates the relation between different measures of price volatility (conditional, historical and implied) and different types of speculation (short-run, long-run and excessive) in futures commodity markets for the period 2000–2015. To this purpose, we first use a pairwise Granger causality analysis for 28 individual commodities belonging to energy, agricultural and metal markets. Then, we implement a novel combination of combinations of p-values test to assess whether lead-lag relations exist between speculation and price volatility for broad categories of commodities. The results of both testing procedures show that the majority of significant relations refer to agricultural commodities and that tendentially short-run speculation leads volatility. This means that noise trading has a leading power on market volatility and scalpers are a class of volatility-drivers.

Speculation and its impact on liquidity in commodity markets

In recent years, there has been extensive debate about the increasing speculative activity in commodity markets and passive index-investments, which are blamed for causing extreme long-term variations and price bubbles. This study sheds light on the question of what effect increasing speculative activity has on liquidity characteristics and aims to identify whether speculators are liquidity providers or consumers. This study finds weak evidence that speculative activity provides liquidity in the long term, while short-term speculative trading consumes liquidity. Further, the analysis shows that stock market liquidity and the liquidity of commodities have a strong positive correlation.

Analysis of land speculation in the urban fringe of Lagos, Nigeria

This study investigates and analyses factors motivating land speculators operating in the urban fringe of Lagos, Nigeria. The paper, in addition to contributing to literature, is the first known attempt to study the behaviour of land speculators in the urban fringe of a growing African megacity with a population in excess of 17 million. Between September and December 2016, two questionnaire surveys were separately administered with a representative random sample of 97 members of the Real Estate Developers Association of Nigeria (REDAN), including 14 members who are actively operating their land, and 12 senior officials of the Lagos Land Bureau. Principal component matrix was constructed to identify the most critical factors determining such acquisitions. Findings reveal seven themed-principal components and a speculative motive that is not related to any desire to resolve the lingering housing supply problem. Land speculators indicated their tendency to acquire for future sale, promote self-esteem and pursue private profiteering business. Furthermore, regulatory lapses, location preference, informality of land title as well as relatively cheap land promote speculative land acquisitions without actual development. Hence, to develop smart cities for solving the lingering housing problem in Nigeria, speculative activities of land developers must be thoughtfully controlled.

PROSPEK HUKUM ISLAM DI BIDANG PENGUATAN MONETER DENGAN PEMBERLAKUAN MATA UANG DINAR DAN DIRHAM

The limitation of the use of coins lies in its weight, so that since before Islam, in addition to the currency of the dinar and dirham, also apply to the trade papers and bonds (credit) for large commercial transactions. In running his government, at least the Prophet set nine policies in the field of monetary, among them are: First, let the currency of dinar and dirhams and trade notes and bonds payable. Second, the exemption of tariffs and import duties on imports of gold and silver and commodities from the Persian and Roman regions. Third, the prohibition of money accumulation (kanz). Fourth, the prohibition of stockpiling to maintain the stability of the value of money. Fifth, the prohibition of lending money (riba) which is run along with the prohibition of hoarding money (kanz) has accelerated the circulation of money directed to investment activities. Sixth, encourage interest-free loans (qardhul hasan) and profit sharing and risk sharing models. Seventh, prevent speculative activities. Eighth, increasing the production of goods and services. Ninth, the abolition of the trade monopoly of the Quraysh in Ukaz and Dul-Majaz markets after the conquest of Mecca. The removal of this monopoly improves the efficiency and distribution of better income. Effective demand and demand for money transactions increased so as to speed up the circulation of money.

Governing the ‘ungovernable’? Financialisation and the governance of transport infrastructure in the London ‘global city-region’

The governance of infrastructure funding and financing at the city-region scale is a critical aspect of the continued search for mechanisms to channel investment into the urban landscape. In the context of the global financial crisis, austerity and uneven growth, national, sub-national and local state actors are being compelled to adopt the increasingly speculative activities of urban entrepreneurialism to attract new capital, develop ‘innovative’ financial instruments and models, and establish new or reform existing institutional arrangements for urban infrastructure governance. Amidst concerns about the claimed ‘ungovernability’ of ‘global’ cities and city-regions, governing urban infrastructure funding and financing has become an acute issue. Infrastructure renewal and development are interpreted as integral to urban growth, especially to underpin the size and scale of large cities and their significant contributions within national economies. Yet, overcoming fragmented local jurisdictions to improve the governance and economic, social and environmental development of major metropolitan areas remains a challenge. The complex, and sometimes conflicting and contested inter-relationships at stake raise important questions about the role of the state in wrestling with entrepreneurial and managerialist governance imperatives. City and government actors are simultaneously engaging with financial actors, the financialisation of the built environment, the enduring and integral position of the state in infrastructure given its particular characteristics, the transformation of infrastructure from a public good into an asset class through the agency of private and state interests, and what relationships, if any, exist between ‘effective’ urban governance systems and improved economic performance.Contributing to theoretical debates about the apparent ‘ungovernability’ of global cities and city-regions, this paper presents analysis and findings from new research examining the financialisation and governance of transport infrastructure in the London global city-region. The continued rise in London’s population is placing significant demands upon existing infrastructure assets and systems and provoking debates about the extent and nature of growth in the UK’s capital, the development of and relationship between urban and sub-urban built environments, and the ability of national, sub-national and local actors to plan infrastructure renewal and investment both within London’s formal administrative boundary and wider city-region. Combining aspects of urban entrepreneurialism and managerialism amidst the challenges of governing a global city-region, the search for new infrastructure investment by state actors is leading to the revival of specific funding and financing mechanisms and practices. The mixing of existing and new funding and financing techniques as well as governance arrangements in distinct and, at times, hybrid ways, is amplifying the novel challenges facing actors and institutions responsible for London’s governance.