SUPREMACY OF THE US ON EQUITY MARKETS OF THE BRICS: A MYTH OR A REALITY?

Abstract

The BRICS is considered as the most promising and emerging markets’ group and pool of economies. For the last few years, the economies of the US and BRICS are sharing increasing trade, economic and financial linkages. As the emerging economies aspire to become truly developed nations, the issue of heavy interdependence on developed economies is often addressed. However, the patterns of influence of the US on the equity markets of the BRICS have undergone tremendous changes in the recent years. The present study aims to investigate the inter-linkages and causal relationships between the US and BRICS equity markets. The study exclusively depends on different econometric models and techniques such as unit root test, cointegration and causality tests to evaluate and analyse the empirical data. The overall results report changing market dynamics and time varying integration among the countries across the years of study. The study also finds the fading away of the US supremacy over the BRICS markets and a story of Chinese supremacy as a leader in world economy.