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This project allows you to learn more about international investing and about firms that compete in the global arena. You will be asked to create a stock portfolio of at least two U.S.-based multinational corporations (MNCs) and two foreign stocks. You will monitor the performance of your portfolio over the semester and ultimately will attempt to explain why your portfolio performed well or poorly relative to the portfolios created by other students in your class. The explanations will offer insights on what is driving the valuations of the U.S. –based MNCs and the foreign stocks over time.

 International Investing Project

This project allows you to learn more about international investing and about firms that compete in the global arena. You will be asked to create a stock portfolio of at least two U.S.-based multinational corporations (MNCs) and two foreign stocks. You will monitor the performance of your portfolio over the semester and ultimately will attempt to explain why your portfolio performed well or poorly relative to the portfolios created by other students in your class. The explanations will offer insights on what is driving the valuations of the U.S. –based MNCs and the foreign stocks over time.

Step 1: Form your portfolio 

  1. Select two stocks of US.-based MNCs: If you want to review a list of possible

stocks or do not know the ticker symbol of the stocks you want to invest in, go to the website http://biz.yahoo.com/p/, which lists stocks by sectors or industries. You can select an industry; Click on “More Info” on the right most and then click on “Company Index”. You will see a list of companies in this industry.

Requirements on US-based MNCs:

a).  The firms are from different industries

b).  The firms must conduct a substantial amount of international business.

  1. Select two foreign stocks: Select two foreign stocks that are traded on US

stock exchanges. Many foreign stocks are traded on US stock exchanges as American depository receipts (ADRs), which are certificates that represent ownership of foreign stock. ADRs are denominated in dollars, but reflect the value of a foreign stock, so an increase in the value of the foreign currency can have a favorable effect on the ADR’s value. To review a list of ADRs in which you may invest, go to http://www.adr.com/, and click on DR Search. Then you can select ADRs. Alternatively, you can select foreign stocks from the list of ADRs (Excel file) posted on class website on Canvas.

Requirements on ADRS: The ADRs that you select must meet the following requirements as we need to compare the stock performance with the local stock index in Step 3.

a).   Listed on NYSE or NASDAQ

b).  Not from the same foreign country

c).  The firms are based in any of the countries shown on the website

https://finance.yahoo.com/world-indices

The match of country and index code is shown below:

  1. Argentina                     ^MERV
  2. Brazil                            ^BVSP
  3. Canada                         ^GSPTSE
  4. Mexico:                         ^MXX
  5. Australia                       ^AORD
  6. Japan                            ^N225
  7. China                            ^SSEC
  8. India                             ^BSESN
  9. Indonesia                       ^JKSE
  10. Malaysia                        ^KLSE
  11. New Zealand                 ^NZ50
  12. Singapore                       ^STI
  13. Taiwan                           ^TWII
  14. HongKong                      ^HSI
  15. South Korea                   ^KS11
  16.  Austria                           ^ATX
  17. Belgium                           ^BFX
  18. France:                            ^FCHI
  19. Germany                         ^GDAXI
  20. Nitherlands                     ^AEX
  21. Norway                            ^OSEAX
  22. Italy                                 ^MIBTEL
  23. Spain                                ^SMSI
  24. Sweden                             ^OMXSPI
  25. Swiss                                 ^SSMI
  26. England                            ^FTSE
  27. Egypt                                ^CCSI
  28. Isreal                                ^TA100
  29. United States                  ^GSPC

Click on any company listed to review background information, including a description of its business and its stock price trend over the last year. It is assumed that you will invest $10,000 in each stock that you purchase.

Step 2: Monitor your portfolio

By Jan. 29, each group should submit a table in the following format:

US-Based MNCs
Name of Firm Ticker Symbol Amount of Investment Price per Share Trade Date
    $10,000    
    $10,000    

 

Foreign Stocks (ADRs)
Name of Firm Ticker Symbol Country Amount of Investment Price per Share Trade Date
      $10,000    
      $10,000    

You can easily monitor your portfolio using various Internet tools. If you do not already use a specific website for this purpose, go to http://finance.yahoo.com/?u and register for free. Follow the instructions, and in a few minutes you can create your own portfolio tracking system. This system not only updates the values of your stocks, but also provides charts and recent news and other information on the stocks in your portfolio.

Step 3: Evaluate your portfolio

Every two weeks, you should evaluate the performance and behavior of your stocks.

  1. Determine the percentage increase or decrease in each of your stocks over the

period of your investment and provide that percentage in a table like the one below. In addition, offer the primary reason for this change in the stock price based on news about that stock or your own institution. To review the recent news about your stock, click on http://finance.yahoo.com/?u and insert the ticker symbol for each firm.

 

Portfolio Performance Monitoring
Name of Firm Percentage Change in Stock Price Primary reason
     
     
     
     
Portfolio (Average)    

 

  1. Determine whether the performance of each of your US-based MNCs is driven by the US market. Go to http://finance.yahoo.com/?u and insert the symbol for your stock. Once the quote is provided, click on chart. Click on Compare and then click on the box marked S&P (which represents the S&P 500 Index). Now you can assess the relationship between the US market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by US market conditions.

Repeat this task for the other US-based MNC in your portfolio.

  1. Determine whether the performance of each of your foreign stocks is driven by the corresponding market where the firm is based. First, go to the site http://finance.yahoo.com/world-indices and look up the symbol for the country index of concern. For example, Brazil’s index is ^BVSP. Next, go to the site http://finance.yahoo.com/?u and insert the symbol for your stock. Click on Chart; Then click on Compare, insert the corresponding market index symbol (make sure you include the ^ if it is part of the index symbol) in the box. Then, click on Draw and assess the relationship between the market index movements and the stock’s price movements. Explain whether the stock’s price movements appear to be driven by the local market conditions.

Repeat this for the other international stock.

  1. Determine whether the stock performance of each of your foreign firms is influenced by the exchange rate movements of the firm’s local currency against the US dollar. You can obtain this information from http://www.oanda.com. Click on CURRENCY CONVERTER. You can convert the foreign currency to US dollars and determine the exchange rate movements over the period in which you invested in the stock. Provide your assessment of the relationship between the currency’s exchange rate movements and the performance of the stock over the investment period. Attempt to explain the relationship that you just found.

Repeat this for the other international stock.

Step 4: Present the evaluation of your portfolio to the class. Background

            information about the business of the firms in your portfolio is required.

            (April 16, 18, 23, depending on how many groups we have)

            Alternatively, you may choose to write a 5-6 page long report regarding the

            evaluation of your portfolio.  

            (Due on April 30th)

All papers should be typed (single spaced paragraphs and double-spaced between paragraphs, 12 pt Times Roman font, 1 inch margins).

 

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