Analysis of Financial Markets and Institutions
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Financial Markets and Institutions
Looking at John’s portfolio it is clear that he has decided to invest in many different types of company, that range from Banking to Information Technology. This spreads the risk factor and means that john has a much better chance of not making a big loss as his investments are widely spread. Obviously John’s main investment objective is to get the biggest return on his investments. Looking at his investments John has invested more in the companies which he views to have less risk of a loss, such as Prudential and HSBC. John has a very aggressive portfolio as it is weighted to common stocks that provide capital growth. It is very unbalanced as there are no bonds or money market. Looking at his portfolio I think John should rebalance his investments to try and spread the risk.

John has spread his risk factor by investing different amounts in five different sectors. He has cleverly bought more shares in the less risky sectors such as life assurance to give him a better chance of increasing his investment and not losing money. John’s sectoral risk profile shows good judgement as the small investment in pharmaceuticals is a safe choice as this sector is very unreliable for investors. The high investment in transport is a good move because the industry is now booming and so the industry is seen as low risk, at the moment. The other three sectors are fairly stable and so are good choices for investment.

John’s industrial risks are also well spread. He has invested in the financial industry the most, as it is the least risky with such companies as Barclays and Prudential. Another industry that he has invested heavily in is services which incorporates a company like British Airways. This is slightly more risky as services can fluctuate a lot. Finally he has invested in the Consumer goods and the General Manufacturers industry. These are the most risky industries as they are very fast moving and they have lots of competition. They are subject to a lot of change so they are seen as high risk. Investing in these is dangerous for John but as he has spread his risk he has something to fall back on if he starts to lose money.

There are major variations in price of Barclay’s shares. It peaks in January at 533p and hits its lowest
in March at 472p. At the end of this period the share price had managed to rise back up to 500p
Overall there is a general decline in the share price over the period, with an over all loss of 85p. You would not expect this to happen over this short period of time as HSBC is in a fairly stable sector.

Overall there is a general increase until late February and then a big loss afterwards. Prudential’s shares peaks at the end of February, which share prices around 530p. During the next month though it has a major drop and reaches as low as 438p. This again is unexpected.

There is a general upward trend in British Airways share prices until early March, then it starts to lose value. They reach a high of 330p in March a peak of 330 in March and after the six months gain 45p.

Again there is a general increase in share prices. They open at 480p and close at 525p. But again like the other companies there is a dip during March.

All the companies seem to have a drop in share price during March. This could be due to many factors such as the end of the financial year or as a reaction to an event such as the Madrid bombings or the fall in the US dollar. This is different for HSBC however as they seem to have a constant period of decline.

Barclays, HSBC and Prudential all follow the general industrial market movement. They are all fluctuating a lot. Also BAA and British Airways follow the market movement, where they have a period of steady growth then fall at the end of March.

Company
Roce (%)
Profit Margin (%)
Return on Assets (%)
Shareholders Return (%)
Intelek
Oxford Bio
241.43
241.43
Image
-5.65
Clarkson
20.66
12.47
12.14
26.21
-3.69
-0.17
-3.71
Company
Current Ratio
Quick Ratio
Borrowing Ratio (%)

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John’S Portfolio And Risk Factor. (June 9, 2021). Retrieved from https://www.freeessays.education/johns-portfolio-and-risk-factor-essay/