INTRODUCTION

FUNCTION

ANALYSIS

GROWTH

RISK SUMMARY

Global Capital Markets for buying and selling

equity and debt instruments at global wide. It channelizes the savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, government and individuals Global capital wants to raise capital at the lowest possible cost. Capital markets typically involve issuing instruments such as stocks and bonds for the medium-term and long-term

Capital markets bring together investors and borrowers Investor

include corporations with surplus cash, individuals, and non-bank financial institutions Borrowers include individuals, companies, and governments Market makers are the financial service companies that connect investors and borrowers, either directly or indirectly Commercial banks are indirect market makers, and investment banks are direct market makers Capital market loans can be equity (stock) or debt ( cash loans or bonds)

A focus of this chapter is on how firms resident in less liquid or segmented markets attain the global cost of

capital and availability of capital. To implement the goal of gaining access to global capital markets, a firm must begin by designing a strategy that will ultimately attract international investors In addition to choose alternative paths to access global markets, this would also require some restructuring of the firm, improving the quality and level of its disclosure, and making its accounting and reporting standards more transparent to potential foreign investors

 Most firms raise their initial capital in their

own domestic market

However, most firms that have only raised

capital in their domestic market are not well known enough to attract foreign investors
Incremental steps to bridge this gap include

conducting an international bond offering and/or cross-listing equity shares on more highly liquid foreign stock exchanges .

GROWTH:Global capital markets are growing at a rapid pace In 1990, the stock of cross-border bank loans was just $3,600

billion By 2006, the stock of cross border bank loans was $17,875 billion The international bond market shows a similar pattern with $3,515 billion in outstanding international bonds in 1997, and $17, 561 billion in 2006 International equity offerings were $18 billion in 1997 and $377 billion in 2006 GDP is expected grow by 0.7 percent in 2014 in the Euro zone

RISK: Nations more vulnerable to speculative capital flows because of lack of knowledge Potential destabilization of economies (Mexico) Capital pursuing short term gains Hot money Long term patient money Lack of quality information Investors react to quickly to news events Differing accounting conventions

When people are risk averse, countries can gain

through the exchange of risky assets. International portfolio diversification can be carried out though the exchange of debt instruments of equity instruments. One important component in the international capital market is the foreign exchange market. Banks are at the center of the international capital market, and many operate offshore.

 Regulatory and political factors have encouraged offshore banking and currency trading Economy: Developed nations will drive global growth Equities: Gains globally, but less than in 2013 and with higher volatility Bonds: Normalization of interest rates; real positive returns in a few markets Foreign exchange: US dollar fundamentally strong Alternative assets: No real estate bubble in Germany Asset allocation: European equities are the top pick

THANK YOU