Reasons of Stock Exchanges Collapse in Asia: A Study from China and Pakistan

Abstract

In current time, a worst economic disaster continues from developed countries like United States of America, United Kingdom and Denmark etc., penetrate to other the countries and leave a negative impact on financial intuitions of developing countries. This economic disaster is the first biggest disaster in the history since the recession of 1928s in Japan. The major objective of this research to portray the picture of the effect of current situation of world financial disaster on stock exchanges of Pakistan (PSE) and China (SSE). For this purpose, facts and figures are collected from July 2004 to 30 June 2017 KSE-100 and SSE-100 index, it shows stock markets’ indicators of Pakistan and China respectively, are used to locate inconsistency, EGARCH model is used. This study unveils the negative shocks that have more prominent effect on the instability of Pakistan and China economy. These stock markets also faced persistent volatility clustering. In the current area, this financial disaster ended at adverse value of share and its payback and disturbs the Pakistani and China stock exchanges but this effect did not influence much to Shanghai stock exchange and other stock exchanges in China but there is no doubt these were shake by this market crutch.