Industries in the world take time to react to changes in the North-American economy

Industries from countries such as Germany, Canada, China, France, Japan and the United Kingdom are slow to react to information coming from industries in the United States of America (USA), revealed a study released today.

According to the study, which was conducted by researchers from the University of Coimbra, the industries of these countries “demonstrate a delay in the reaction to disturbances in the industries of the United States of America (USA) due to the delay in the transmission of information”.

“This delay in the incorporation of information can have a very relevant role, especially for investors, regulators and policy makers”, since the information can “allow the timely detection of localized economic crises that can destabilize the financial markets”, he justified.

The research team is composed of Ana Sofia Monteiro, Nuno Silva and Hélder Sebastião, researchers from the Center for Research in Economics and Management and professors at the Faculty of Economics of the University of Coimbra.

“The assimilation of information by the financial markets does not occur immediately due to limitations of its processing by its investors and the frictions of the markets and, although the technological advance of the last decades has reduced the gap between the production and the incorporation of information in pricing systems, in international markets this discrepancy may still be visible”, explained the investigators.

For this investigation, the transmission of information, through investor transactions, between US industries and six other major economies (Germany, Canada, China, France, Japan and the United Kingdom) was analyzed using an updated database.

This database incorporates “recent periods of turbulence in stock markets, resulting from the introduction of the euro, subprime crisis, sovereign debt crisis, China-US trade tension, Brexit and the covid-19 pandemic”.

According to the researchers, the study highlighted “the international leadership role of the US, and in particular, the industries of basic materials (such as metals, chemicals, forestry products) and energy, which have significant predictive power”.

“This leadership is more pronounced during periods of recession”, during which “correlations between countries are higher, and processing is slower due to the high level of uncertainty”, they add.