Are the Industry Cycles the Global Trend in Investment Activity?

Research output: Contribution to journalConference article

Abstract

Research background: According to the concept of sector rotation, industry cycles affect the investment attractiveness of companies. Industry cycles relate to business ones, and specific industries are preferred for investors depending on the phase of the latter. The scope of this concept application is portfolio investment management. However, we use it in a new way, assuming that the unfavourable phase leads to a decrease in the investment activity of companies in the corresponding industry.

Purpose of the article: Since the concept of sector rotation claims universality, we reveal if the industry cycles are the global trend in investment activity. The research purpose is to test the hypothesis of an industry cycles’ impact on the dynamics of the investment activity in companies obtaining external financing.

Methods: Using the concept of sector rotation, we suggest several industry groups and tested whether the peak of investment activity in each group falls on the expected favourable phase of the business cycle. In the context of global investment trends, this hypothesis should be confirmed at public companies of any sufficiently large financial market. For testing, Russian companies were selected. The growth rate of capital investments was used as an indicator of investment activity.

Findings & Value added: It was revealed that the hypothesis about the impact of industry cycles on the investment activity of a business has the potential for further research. However, there is no sufficient evidence to consider the orientation of the investment behaviour of companies on industry cycles as a global trend.
Original languageEnglish
Article number08010
Number of pages9
JournalSHS Web of Conferences
Volume92
DOIs
StatePublished - 2021
EventThe 20th International Scientific Conference Globalization and its Socio-Economic Consequences - University of Zilina, Faculty of Operation and Economics of Transport and Communications, Department of Economics, Slovenia
Duration: 20 Oct 202021 Oct 2020
https://www.elibrary.ru/item.asp?id=44585174

Scopus subject areas

  • Economics, Econometrics and Finance(all)

Keywords

  • investment
  • investment activity
  • fixed investment
  • sector cycle
  • sector rotation

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