Comparison Study On The Impacts Of Main Macro-Economic Variables On The Net Profit And Stock Price Of China-Korea Steel Industry

The purpose of this study is to provide useful information to researchers,government policy makers and investors by examining the relationship between China's and Korea's representative steel enterprises? profit,stock price and macroeconomic variables.The steel industry is a core industry of the national economy and is an indispensable industry for the stability and economic growth of the nation.In addition,since the base material is supplied to all industries such as automobiles,machinery,construction,and shipbuilding,the industry-related effects are very high.Chinese steel industry occupies 49% of world crude steel production and 45% of crude steel consumption,making it a national industry that exerts great influence on the global steel industry.Korea is not comparable to China in terms of crude steel production and consumption volume.However,it is the sixth largest producer and consumption of crude steel in the world in the same year.The most serious problems surrounding the global steel industry environment in recent years include imbalance in supply and demand due to oversupply,changes in raw material prices,stringent environmental regulations,and intensified protectionism among nations.And these factors are making it more difficult for China,Korea and other major steel nations to compete for survival,so they are struggling to develop a strategy to cope with the unpredictable steel marketThe analytical method is based on the ADF test method to confirm the stability of each variable.The Johansen co-integration test was used to estimate the long-run equilibrium of the variables and to conduct a dynamic analysis of the variables using VAR or VECM depending on the characteristics of the analyzed data.Other researches in the field of accounting related to profit of corporate have mainly focused on forecasting the future performance of the company by time series model and financial analyst.Non-profit accounting data have been developed.However,in the case of forecasting by time series model,it is not statistically significant to predict future profits by using time series data of past profits since time series data of past profits follow the random walk process.Main macroeconomic variables are stock index,exchange rate,interest rate,inflation.We take 10-year government bonds to examine the correlation with steel companies.The analysis period is a 10 years period from January 2006 to December 2015.We found that profit of Chinese steel company has significant correlation with the interest rate of government bond.However,Stock index and inflation are not significantly correlated.The stock price of Chinese steel company has significant correlation with the exchange rate,interest rate and inflation.Profit of Korean steel company has correlation with the interest rate of government.However,it is not correlated significantly.Stock prices of Korean steel companies do not have any significant correlation with main macroeconomic variables.The results of this study show that the main macroeconomic variables in China can predict the changes in the profit and stock price of steel companies.However,in Korea,it is difficult to forecast changes in the profit and stock price of steel companies using main macroeconomic variables.This can be interpreted as much more dynamic development of China's economy than the Korean economy during the period of research.As a result,the results of Chinese steel companies seem to have responded to main macroeconomic variables.However,Korea,whose growth is slower than China,shows that the movement of main macroeconomic variables does not affect the performance of steel companies.