What are the recent developments in global financial markets...?

Introduction
Financial transactions are costly. On the one hand, processing a transaction

requires resources, on the other hand the regulatory framework is costly as well. In

both areas there have been dramatic changes recently. Computerization and

advances in telecommunications lead to considerably lower technical costs.

Furthermore, deregulation has eliminated many barriers to trade. Financial markets

have become and still are in the process of becoming more open, and one often

hears of the globalisation of financial markets”. International transactions which

lead to a net debtor position of countries result in an additional type of transaction

cost: country risk. Unlike domestic borrowers, sovereign countries cannot be

forced to perform their contracts by legal action against them. Instead, creditors

have to rely on indirect mechanisms.

Global Financial Market

Recent developments in global financial markets

Global financial markets witnessed turbulent crisis in the US sub-prime mortgage

market deepened and spilled over to markets for other assets. Concerns about

slowdown in the real economy propelled a broad-based re-pricing of growth risk

by the end of the year.

Multi-national organizations hire the experts in international financial management

to study the inter-play between the various elements of international finance and

accordingly formulate strategies for international business for their organization. It

is also referred to as multinational finance, international monetary economics or

international macroeconomics.

International trade and related financial activities provide both opportunities and

associated risks for investors, exporters and capitalists. By understanding the

emerging trends in this field, they can learn how to invest fruitfully in today’s

environment. The field of international finance has seen a significant growth over

the past decade.

Some of the Recent developments in global financial markets;

1. Countries are Re-balancing Their Import Export Trade

This trend is visible in the way countries like China are trying to balance their

import and export trade. The country’s fast growth in the last decade was fueled by

its major dependence on its import and export trade. The country is known for large

amounts of export of inexpensive goods all over the globe. This happened at a large

scale which was not sustainable. Now China is importing goods in exchange for

investment. It is now focusing on producing everything they need for domestic use.

This puts the countries that relied on Chinese investment in a spot as they struggle

to find comparable markets for their products.

2. There is New Found Cooperation Among Countries
There is a growing need for cooperation in trade among many countries. Countries

are getting involved in treaties and international organizations in a way that is

mutually beneficial to all the member countries. For example, the significant

growth of data economy has led to businesses realizing the need of cross border

data transfer. Hence, large scale multi-national corporations have eased up on their

data transfer related restrictions. This helps the organizations to share online

resources for trading, export and for collecting relevant data from around the world.

 
3. There Exists Growth in Export Opportunities in India and South America

India and many countries in South America such as Brazil, Chile, El Salvador and
Peru have been expanding their economic opportunities. India is growing market
for US exporters. It purchases precious metals and diamonds, machinery, optical
equipment and agricultural products from the USA. Brazil imports aircraft,
machinery, petroleum products and electronics from the USA. These countries have
a strong and growing economy as well as an ever-expanding middle-class segment
who is eager to purchase premium merchandise.

 
4. There is a Rising Popularity of Euro Markets
Euro market is a financial market that deals with euro-currencies. It consists of

banks outside the country from where the currencies originate. Euro banks are a
popular choice for many multinational corporations for their financial plans because

they are free from any regulation and they have the ability to expand a stock of

money and credit outside the control of national authorities.

5. There is a Visible Emergence of Multi-National Corporations from

Emerging Economies

In 2006, it was observed that out of the 100 big multi-national corporations of the
world, 22 of them came from emerging economies. This figure has been on an
increase and big multinational corporations from the developing or transitional
economies are playing a significant role in world economics.

6. There is an Increase in Cross Border Mergers and Acquisition Based

Activities

Due to the rise in the level of foreign direct investment (FDI), there has been a

spike in mergers and acquisitions (M&A) within the financial domain across the

globe. The acquisition of ABN-AMRO by the consortium of Royal Bank of

Scotland, Fortis and Santander was one of the largest deals in the history of banking

industry.

7. There is a Deregulation of the Financial Markets

The world is witnessing an internationalization of money and the capital markets.

Countries like the USA and many European countries offer free financial markets to
investors. Singapore and Hongkong have also emerged as strong financial markets.

This has led to the creation of a worldwide banking structure.

 
Conclusion

As organizations are going global, there is an increased interest in international

finance for investors and global business owners. And, they can make the most of

their presence in the international finance market by being aware of the latest

trends in this field.