Financial Investments in the Global Water Market

Abstract

This chapter examines the relationship between the water sector of the equity markets. It includes the world market and markets of different individual countries such as China, Hong Kong, Singapore, Germany, France, the UK, Brazil, Chile, and the US for the period 2001-2020. Investment returns and volatility of these markets are analyzed to understand investment decision-making in these water markets. The OLS and quantile regressions show that China, Hong Kong, Singapore, Germany, France, the UK, Brazil, Chile, and the US are positively related to the world market. The results confirm simultaneous interactions between the world market and the other nine markets. The ARMA (1,1)-GARCH (1,1) model shows a high degree of persistency in the conditional volatility of stock returns for these water markets which means “explosive” volatility. Moreover, the VAR analyses show that the nine markets positively and negatively affect the world market. The findings may assist the international institutions while deciding investment in water portfolios.