Financial Markets and Institutes

Question: Discuss about theFinancial Markets and Institutes. Answer: Introduction Top-down analysis is a method through which analyst first look at the big picture and then analyzes the other small details. In this approach traders analyze the economy and then forecast the industry which provides good returns to the investors, and after analyzing the industry they choose companies in that industry and purchase stocks of those companies. Investors look for the macro variables at the time of using this approach such as GDP, balance of trade, inflation rate, movement of currency, rate of interest and other factors of an economy, sectors which are performing good at that time or in future or countries (Investopedia, n.d.). Harvey Norman Holdings Limited is largest retailers in Australia and deals in products related to home and lifestyle. There is 30% increment in the profits of HVN till the date 30 June 2016. Sales in HVN operated stores increase by 11% i.e. $1.8 billion and sales in the franchisee stores increase by 7.6% i.e. $5.3 billion. Net profit of the company increases by 20.2% i.e. $314.7 million. According to chairman and chief executive report of HVN, macro economic conditions in which company operates can change and conditions related to housing in Australia are strong and favorable for the company. Earnings per share of the company is increase from the last year, therefore HVN pay more dividend from last year. Not only HVN but other retailers of lifestyle products had favorable market conditions this year. Currently HVN trades in market at 13x EBITDA and industry in which HVN operates trades at 11.6x EBITDA. Therefore, we can say that industry in which HVN operates has favorable market conditions in Australia. Investors can get good returns if they invest this time in the company and shareholders of the company are advised not to sell their shares at this time (Simply Wallst, 2016). Richard Murray is a chief executive officer of JB Hi-Fi and he runs his best teams in the retail market of Australia. From the last few years company share price are growing day by day. Richard Murray faces new challenges after the deal of The Good Guys. This deal was announced on Tuesday, and after the deal Richard Murray shifts his focus in the field of home and lifestyle products. JB Hi-Fi taken over The Good Guys, and enter into the market of home products. This takeover increases the market share of JB Hi-Fi from 3% to 29%, and electronic market related to consumer increases from 19% to 24%. JB expect that in next three years a rise in synergies rate from the $15 million to $20 million. Therefore shareholders of JB can expect good returns on their investment and new investors can invest in the stock of JB (Financial Review, 2016). References: Financial Review, (2016). The Good Guys deal is a huge challenge for JB Hi-Fi's Richard Murray. Retrieved on 20th September 2016 from : https://www.afr.com/business/retail/the-good-guys-deal-is-a-huge-challenge-for-jb-hifis-richard-murray-20160913-grf8xa. Investopedia. Top-Down Analysis. Retrieved on 20th September 2016 from: https://www.investopedia.com/terms/t/topdownanalysis.asp. Simply Wallst, (2016). Harvey Norman Holdings Limited (ASX: HVN): Is It A Buy On 30% Jump in Profits. Retrieved on 20th September 2016 from : https://simplywall.st/news/2016/08/31/harvey-norman-holdings-limited-asxhvn-is-it-a-buy-on-30-jump-in-profits/.