The Impact Of BRIC Countries' Risk Rating On Its Stock Market Returns

With the rapidly development of "the Belt and the Road",the BRICS countries(Brazil,Russia,India,China and South Africa)have become the major consumers and the major beneficiaries of the global economy.BRICS countries become increasingly interconnected.The changes of risk ratings have different impacts on the BRICS stock market returns.As the global uncertainties increased,the political environment,economic development and financial markets of BRIC countries have been affected from 2015.The BRICS countries' risk ratings have undergone great changes and the returns on the stock market has also experienced a degree of volatility.The existing literature mainly focus on the analysis of the factors that affect the returns of BRICS stock markets and how to promote the economic growth.However,very few studies have been done on how the changes of risk ratings affect the returns on their stock markets.Therefore,it is helpful for us to fill the blank of research on the relationship between risk rating and stock market returns considering BRICS countries.This paper constructs a dynamic threshold model to analysis the impacts of changes of BRICS risk ratings on their stock market returns,with the threshold variables of the global stock market volatility,the global oil price and the gold price volatility.Empirical results show that:(1)Changes in the country risk ratings of BRICS countries have impacts on their stock market returns,these impacts are notable for Russia,India and China;(2)The oil price fluctuations will affect the extent of the impact of the changes of risk rating on BRICS stock market returns,especially economic risk ratings and financial risk ratings;(3)The relationship between risk rating and stock market returns in BRICS is not affected by the fluctuation of the gold price,which still need to be tested in future research.;(4)The relationship between risk rating and stock market returns in BRICS is significantly affected by the fluctuation of the global stock market fluctuations.This paper puts forward some suggestions for the BRIC stock market towards the mature market direction,after deeply analyzing the impacts of BRICS risk ratings on their stock market returns under the influence of different external factors.