Dynamic relations among the trading partners of Pakistan

Abstract

Trade is having the major role to linking the Pakistan with other countries. The thesis is helpful in studying the financial market integration of the stock market of Pakistan and its trading partners. In this empirical study, stock markets of the major trading partners of the Pakistan are selected. Captivatingly, the both developed and emerging top trading countries of Pakistan are included, which are having less integration level among them, so a portfolio can benefit portfolio investors. Furthermore, this thesis studied the integration of Pakistan’s stock markets and its partners including developing and developed stock markets, they are; China, Japan, Kuwait, Saudi Arabia, Bahrain, UK, UAE, and USA. The study investigated month to month shutting stock costs of lists for a time of 11 years from July 2008 to June 2018. Information will be gathered from the accompanying sources: Yahoo Finance, MSCI file and site of individual securities exchanges. The study applied estimating technique that are unit root test, Johnson and Juselius co-integration, Granger causality, error correction model, variance decomposition and impulse response function. Also test basic descriptive statistics and correlations matrix. The results depicted that there is co-integration relationship among stock markets of Pakistan and its trading partners. These results have domestic and international investors can take benefits from this study. Likewise, this examination is useful for monetary and money related leaders, venture organizations and banks, about exchanging advantages, and patterns of the securities exchanges. The future work on financial integration of the Pakistan and these markets would be a natural extension of this work.