3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item African equity markets integration: a case study of COMESA(2017) Mundonde, JusticeThe vicious quest for higher risk-adjusted returns through diversification of portfolios has seen an enormous amount of foreign capital flows into new emerging markets. However, the success of any strategy profoundly depends on the degrees of comovements among markets - higher comovements limit the possible gains from diversification. It has been argued that the very act of chasing after these diversification benefits, which mainly includes financial globalisation, has actually resulted in the erosion of the benefits themselves. In addition, aspects such as international trade, the establishment of trade blocs and liberalisation of market controls has further reduced these diversification benefits. In this study, the long-run cointegration, short-run causality and volatility linkages were examined using six COMESA markets indices. The goal of the study was to ascertain whether the establishment of this bloc has resulted in increased association among the member markets. The astonishing rate at which globalisation has been growing at has drawn with it both opportunities and risks for investors. The Engle-Granger, the Johansen cointegration technique and the ARDL test methods revealed that the markets integrated in the long run, a result indicative of low diversification benefits across COMESA markets. However, the weak short-run causality from the causality tests revealed that despite the strong long-run relationship, an active investment strategy that seeks to diversify portfolios in the short-run could still yield enormous diversification benefits. A subsequent examination of the volatility linkages using generalised autoregressive conditional heteroscedasticity models revealed that uniformity of volatility structures in terms volatility persistence, leverage effects and risk premium across the markets, indicative of the high likelihood of volatility spill-overs across the markets. This implies that, despite the weak short-run causality, the benefits from short-run diversification can still be quite low due to the high likelihood of volatility spillovers across these markets. In light of these results, investors within the COMESA markets should rather focus on other markets outside the COMESA as diversification destinations.Item The politics and economics of regional integration in Africa: a comparative study of COMESA and SADC, 1980-2015(2016) Nagar, Dawn IsabelThis thesis examines the efforts of the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) to promote regional integration between 1980 and 2015 in the areas of trade and security. The conceptual framework provides a focused review of general and specific literature on two key concepts of regional integration: divergence, and convergence. Throughout the thesis, the core focus is on the divergence and convergence of COMESA and SADC. The thesis articulates two analytical frameworks: the neoclassical economics approach, and the neoclassical realist approach. A historical account focuses on the history of the Preferential Trade Agreement (PTA) of 1981 that evolved into COMESA by 1993. A history of Southern Africa’s Frontline States (FLS), which evolved into the Southern African Development Coordination Conference (SADCC) in 1980, and later into SADC in 1992, is then provided. The thesis discusses apartheid South Africa’s involvement in the Eastern and Southern African regions. The thesis provides a discussion on the debate on the rationalisation processes of these two organisations: COMESA and SADC, between 1991 and 1997. The thesis next expands on the regionalisation processes of COMESA and SADC between 2008 and 2015. The main actors and factors assessed involve South Africa’s market-led regional approach, its regional developmental role and its economic impact on both regions since it joined SADC in 1994. The thesis expands on the two main regional integration approaches adopted by the COMESA–EAC (East African Community)–SADC Tripartite bloc (created in 2008) of variable geometry and trade liberalisation, as it moved towards its Tripartite Free Trade Area that was signed in June 2015. The thesis also provides definitions and assumptions of two new theories deployed to strengthen the research: i) neoclassical economic regional integration, and ii) neorealist security convergence, which are applied in the thesis. The thesis thus expands on how COMESA and SADC (as both institution and member states) manage multiple memberships. A central argument of the thesis is that multiple memberships have become a stumbling block for convergence. In furtherance of this argument, the thesis explains the benefits of regional integration schemes. Therefore assessed, is how developing countries are likely to be better served by “North–South” than by “South–South” free trade agreements. The analysis is expanded by a discussion of economic convergence in the neoclassical economic approach of open trade in regional trade agreements within the Southern African Customs Union (SACU) – whose five members all belong to SADC - with the presence of a regional hegemonic state: South Africa. To further expand the concept of regionalism to encompass security cooperation, the thesis finally assesses COMESA and SADC’s managing of regional security since the 2008 Tripartite Agreement, by employing the concept of regional security complexes.