Equity Markets around the World in a Bubble ?

Stock market bubble - definiton

• A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation.

• Stock price/GDP is above historical level

Do the stock markets bubble

exist?

Yes

• Stocks are sometimes sold for market price that is higher than their real value

• Countries which execute higher control over their economy and political system, are able to cover real situation on the markets

Example how the bubble looks like

No

• The factors influencing the stock makret stands outside the market

• Eg. The collapse of oil prices, rise of the US dollar

Conslusion:

• The fact, if the bubble exists, differs from country to country

• The impact of the stock market bubbles on the economy depends on the ratio of tradable value of the GDP

• Wisnu Widiyantoro, Pavlina Rucki