Developing Fiji's Persistently Small and Inactive Stock Market: Exploring a Strategic Fiji-Australia Alliance Prospect

Abstract

Fiji’s thirty-five year old stock market remains persistently small and inactive but the state’s drive to retain and develop it remains equally unwavering. Numerous strategies have been tried and tested with little attention however to the issue of ‘small scale’. Inspired by the increasing global contest by exchanges to expand their scale and scope, this study begins to explore a strategic Fiji-Australia alliance prospect by first taking stock of any existing linkages, anticipating the two markets to be already closely linked for a number of reasons including proximity, trade, aid, and a large, Australian bank presence in Fiji. Advanced time series techniques including DCC, VDC and IRF show, contrary to expectations, that Fiji’s stock market is not at all closely linked to Australia’s or any of the other major trading partners. On a slightly positive note, of all the five major trading partners, albeit hardly noteworthy, Australia might have the most influence on Fiji’s market. Nevertheless, a Fiji-Australia alliance might be the only viable option to address Fiji’s entrenched ‘small scale’ conundrum for a meaningful subsistence of its stock market; a planned future study will examine the opportunities and challenges of accomplishing the alliance.