قیمت فلزات و عملکرد بازار سهام: آیا پیوند تجربی وجود دارد؟ Metal prices and stock market performance: Is there an empirical link?

1. Introduction Surprisingly, little work has been done on the relationships between metal price index movements and stock market performance since previous studies have focused on the relationship between oil/ gold prices and stock prices. An important item that influences production costs, foreign and domestic earnings, and determines aggregate demand and supply is metal prices. An increase in metal prices leads to an increase and a decrease in income and wealth for metal producers and metal consumers, respectively. In other words, the aggregate demand affects corporate output and domestic price levels (through its effects on expected inflation which in turn affects the expected discount rate), which eventually affects corporate earnings and stock market share prices. Especially, asset prices and stock prices in particular will be influenced by the price of metals, through the cash flow of metal producing firms. Asset prices may then affect consumption through: (i) investments via the Tobin-Q effect (wealth channel), and (ii) increase a firm’s ability to fund operations (credit channel). Thus, asset prices may be an important transmission channel of wealth. It is rational to expect that the stock market would absorb information about the consequences of metal price shock and include it in stock prices very quickly. In efficient financial markets, the actors will predict these changes, therefore, the steps will take place almost simultaneously. Both the current and the future impacts of such a shock should be absorbed into prices and returns without waiting for those impacts to actually happen due to the fact that asset prices are the present discounted value of the future net earnings of firms. Such a strong metal price impact on the national economy makes countries primarily targets for examining the links between metal prices and the performance of their stock markets.