The London-based Baltic Exchange measures changes in the cost of transporting raw materials such as metals, grains and fossil fuels by sea, through the Baltic Dry Index (BDI). Dry bulks represent initial or intermediary steps of the production cycle. Shipping of dry bulks therefore happens even before the production cycle begins. This allows the use of BDI as a practical leading economic indicator. This research attempts to prove that the BDI has predictive ability for a range of major Asian stock market returns. The following formula is used to calculate the BDI, The value 0.113473601 is the multiplier introduced to standardise the calculation and was first applied when the BDI replaced its predecessor BFI (Baltic Freight Index). Time charter average (TCavg) on routes measured covering Handysize (HT), Supramax (ST), Panamax (PT), and Capesize (CT) ships. These dry bulk carriers carry a range of commodities including coal, iron ore and grain in the 23 routes tracked by the BDI.

Samarasena, C.A., & Sigera, I. (2016). Use of the Baltic Dry Index as a leading economic indicator to predict Asian share market performance [Extended Abstract]. In T.L. Gunaruwan (Ed.), Proceedings of 1st International Conference on Research for Transport and Logistics Industry 2016 (pp. 121-124). Sri Lanka Society of Transport and Logistics. https://slstl.lk/r4tli-2016/