(e) Price volatility

Stock deals Market rigging Price cutting.

Security problems and disruptions in production also increased price volatility.

This, however, was greatly undermined by commodity price volatility, tariff peaks and tariff escalations.

Producing countries have also tried to contain price volatility by forming international cartels. But these have seldom worked.

Speaking of risk, we have seen that price volatility of food crops in Africa is the highest in the world.

During the consultations, speakers discussed both the long term and the short term dimensions of the problem of commodity price volatility.

Recent global economic trends called for major policy initiatives, for example for export diversification, investment in infrastructure and control of price volatility.

TOKYO In the last week or so, stock markets around the world have been hit by an upsurge in volatility, with large price swings confronting traders in New York, Tokyo, London, and beyond. And the entire global financial spasm has been largely blamed on a single culprit China.

UNCTAD is also actively working on issues related to the impact of oil price volatility on African oil importing and oil exporting countries.

The enormous pressure of fuel price volatility on our emerging economies is becoming a brake and a factor of distortion for any development plan.

Corporate earnings in Brazil have gone up roughly as fast as stock prices. With the price earnings ratio remaining stable and moderate, the stock market boom does not appear to reflect merely investor psychology.

The major problem with these flows was volatility, and was characterized by heavy concentration on the most mature markets with a large stock market capitalization and high levels of liquidity.

And government intervention to block the exits is inadequate. On the contrary, until China s stock market opens up and its institutional foundation becomes predictable, volatility will be its only guiding rule.

Yet another reason for the correction is that valuations in stock markets are stretched price earnings ratios are now high, while growth in earnings per share is slackening, and will be subject to further negative surprises as growth and inflation remain low. With uncertainty, volatility, and tail risks on the rise again, the correction could accelerate quickly.

As long as China continues to pursue pro market reforms, it will remain the largest single country contributor to global GDP growth over the medium term unperturbed by stock market volatility. If reforms stall, falling stock prices are likely to be the least of China s worries.

Protectionism threatens open markets and GDP growth. And price volatility, whether triggered by drought or short sighted national policies, could deter investments in agriculture and decrease the poor s purchasing power.

An increase in the stock price of steel manufacturers suggests an increase in the demand for steel, which induces entrepreneurs to start more steel plants and investors to provide them with the money. Conversely, a decrease in the stock price of steel manufacturers leads entrepreneurs to liquidate existing plants and dissuades investors from committing more resources to the sector.

Where Did Market Volatility Go?

On the contrary, the real question is why the increase in stock prices has not outpaced growth in corporate earnings. After all, in the 1990 s, the US stock market surge (as in many countries) was fueled by record high price earnings ratios.

MILAN Since the global economic crisis, sharp divergences in economic performance have contributed to considerable stock market volatility. Now, equity prices are reaching relatively high levels by conventional measures and investors are starting to get nervous.

For many countries in the region, a reversion to commodity dependence was unavoidable, with an attendant exposure to high price volatility, mainly from supply shocks, even as real prices continued their secular decline.

The US government has been particularly aggressive in supporting the stock market since the peak of the equities price bubble in 2000, most notably cutting interest rates repeatedly. Of course, this was publicly justified in terms of stimulating the economy, not supporting the stock market.

run Stock level at April 1998 Excess stock

STANFORD The Chinese government s heavy handed efforts to contain recent stock market volatility the latest move prohibits short selling and sales by major shareholders have seriously damaged its credibility. But China s policy failures should come as no surprise.

It was important for the international community to take action to improve their access to trade financing, protect them against the adverse effects of trade liberalization and commodity price volatility, and reduce their transport costs.

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Export restrictions in producing countries and price controls in importing countries both serve to exacerbate the magnitude of the world price upswing, owing to the artificially reduced quantity that is still internationally traded. If producing and consuming countries in grain markets could cooperatively agree to refrain from such government intervention probably by working through the World Trade Organization world price volatility might be lower.

Even after the market volatility following the crisis in Greece and the Chinese stock market s plunge, valuations appear to be high. The S P 500 has surpassed pre 2008 levels, with companies shares trading at 18 times their earnings.

One would think that market prices should be volatile as investors try to absorb what this earnings volatility means. But we have learned time and again that stock markets are driven more by psychology than by reasoning about fundamentals.

Lowering volatility and sopping up excess liquidity can be beneficial, but there are risks here as well regulators can easily overshoot the mark, leaving financial markets with weakened capacity for price discovery and too little liquidity.

Management of volatility and its effects on development

BEIJING China s stock market has been a hot topic since the summer, when a rapid rise gave way to a major plunge, triggering a global equities sell off. The question now is what can be done to prevent further volatility.

LAGUNA BEACH The world is increasingly characterized by divergence in economic performance, monetary policy, and thus in financial markets. Global divergence has already contributed to stock market volatility, unprecedented declines in advanced economies' government bond yields, and outsize currency movements.

They held large inventories of these assets, thus providing liquidity and smoothing excess price volatility. But, with new regulations punishing such trading (via higher capital charges), banks and other financial institutions have reduced their market making activity.

Global economic instability correlates strongly with energy price volatility. Economic development is in significant part defined by the process of overcoming energy poverty, yet 1.6 billion people still lack access to even the most basic energy services.

For instance, they may buy the stock of companies that they know will be awarded a contract by the Government (the price of the stock is likely to go up when a big order is publicly announced, and corrupt officials can then sell the shares at a substantial profit).

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You call them stock, or stock options, derivatives, mortgage backed securities.

CAMBRIDGE Under French President Nicolas Sarkozy s leadership, the G 20 has made addressing food price volatility a top priority this year, with member states agriculture ministers meeting recently in Paris to come up with solutions. Small wonder world food prices reached a record high earlier in the year, recalling a similar price spike in 2008.

In 1996, when international demand for Chilean investments was especially strong, the sequestering requirement appeared to serve in effect as the willingly paid price of entry into the Chilean stock market.