The Czech Equity Market – Its Effectiveness and Macroeconomic Consequences (in Czech)

This paper examines features of the Czech stock market?s development from 1997 to 2003 and attempts to unveil the macroeconomic consequences of stock-price development. The analysis of the stock market?s behavior supports a cautionary stance on the hypothesis of the efficient-market theory, even in its weak form. Another finding, as regards the macroeconomic consequences of stock-price development, undermined the assumption of the positive wealth effect of rising stocks. In relation to GDP growth, the prediction power of the stock index proved rather limited. The Czech stock market can also function as an instrument of portfolio diversification, at least in relative terms, since the correlation to the Czech bond market was weak. Contrariwise, the correlation among the Czech, U.S., and European stock markets increased in time, restricting the room for portfolio diversification.