INTERNATIONAL CAPITAL MARKET

 Capital market
 Capital markets are markets where people, companies,
and governments with more funds than they need
(because they save some of their income) transfer those
funds to people, companies, or governments who have a
shortage of funds (because they spend more than their
income).

 International Capital market

 The group of closed interconnected markets in which
residents of different countries trade-assets such as
currencies, stocks and bonds.
 Capital markets promote economic efficiency by channeling
money from those who do not have an immediate productive
use for it to those who do.
Features of International Capital
Markets

 Capital markets efficiently direct capital to

productive uses.
 Finance can be direct or indirect.
 Capital markets are important because they
promote efficiency and productive investments.
 Risk Aversion
 The risk associated with a trade of assets is shared when
assets are traded internationally.
 When people are risk averse, countries can gain
through the exchange of risky assets.
 International capital markets make these trades
possible.
 Reduce risk through Portfolio Diversification as a
Motive for International Asset Trade
 International portfolio diversification can allow
residents of all countries to reduce the variability of
their wealth.
• Changes in the International Marketplace Resulted in
a New Era of Global Capital Markets During the Late
1990s, which were Critical to Development.
New York Stock Exchange
 It is the world's largest stock exchange by market capitalization of its
listed companies at US$12.92 trillion as of Dec 2010.
 The NYSE is operated by NYSE Euronext, which was formed by the
NYSE's 2007 merger with the fully electronic stock exchange
Euronext.
 The New York Stock Exchange provides a means for buyers and
sellers to trade shares of stock in companies registered for public
trading. The NYSE is open for trading Monday through Friday
between 9:30am – 4:00pm ET, with the exception of holidays
declared by the Exchange in advance.
 On the trading floor, the NYSE trades in a continuous auction
format, where traders can execute stock transactions on behalf of
investors.
 The auction process moved toward automation in 1995
through the use of wireless hand held computers (HHC).
The system enabled traders to receive and execute
orders electronically via wireless transmission.
 In the mid-1960s, the NYSE Composite Index was
created, with a base value of 50 points equal to the 1965
yearly close. To raise the profile of the composite index,
in 2003 the NYSE set its new base value of 5,000 points
equal to the 2002 yearly close.
NASDAQ
 "NASDAQ" originally stood for "National Association of
Securities Dealers Automated Quotations Systems.“
 It is the largest electronic screen-based equity securities
trading market in the US and second largest by market
capitalization in the world.
 NASDAQ stock exchange began trading on February 8,
1971, it was the world's first electronic stock market.
 NASDAQ was the successor to the over-the-counter
(OTC) system of trading.
 In 1992, it joined with the London Stock Exchange to form
the first intercontinental linkage of securities markets.
 In 2006 NASDAQ changed from stock market to licensed
national exchange.
 NASDAQ has a pre-market session from 7:00am to
9:30am, a normal trading session from 9:30am to 4:00pm
and a post-market session from 4:00pm to 8:00pm ET.
 The NASDAQ-100 is a stock market index of 100 of the
largest non-financial companies listed on the NASDAQ. It
is a modified market value-weighted index. The
companies' weights in the index are based on their market
capitalizations. It does not contain financial companies,
and includes companies incorporated outside the United
States.
 As of January 13, 2011, there are 2,872 listings.
London Stock Exchange
 As of Dec 2010, the Exchange had a market capitalisation of US$2.63
trillion, making it the fourth-largest stock exchange in the world.
 The LSE equity market has four core areas:
 The Main Market.

 AIM, established in 1995 for smaller companies. AIM is a sub-

market of the LSE, allowing smaller companies to float shares with
a more flexible regulatory system than is applicable to the main
market.
 The Professional Securities Market, for raising capital through
debt securities or depositary receipts.
 The Specialist Fund Market, "designed purely for the needs of
highly specialised investment entities seeking institutional,
professional and highly knowledgeable investors."
 The LSE's current trading platform, based on
Microsoft's .NET framework, was developed by Microsoft
and Accenture.
 Normal trading sessions are from 08:00 to 16:30 every
day of the week except Saturdays, Sundays and
holidays declared by the Exchange in advance.
 As at 31 July 2010, the Exchange listed 2,713
companies.
 The FTSE 100 Index is a share index of the 100 most
highly capitalised UK companies listed on the London
Stock Exchange. The index is maintained by the FTSE
Group, an independent company which originated as a
joint venture between the Financial Times and the
London Stock Exchange.
Euronext
 Euronext N.V. is a pan-European stock exchange based
in Amsterdam and with subsidiaries in Belgium, France,
Netherlands, Portugal and the United Kingdom.As of
Dec 2010, markets run by Euronext had a market
capitalisation of US$2.41 trillion, making it the 5th largest
exchange in the world.
 Euronext was formed on 22 September 2000 following a
merger of the Amsterdam Stock Exchange, Brussels
Stock Exchange, and Paris Bourse, in order to take
advantage of the harmonisation of the European Union
financial markets.
 Euronext merged with NYSE Group on April 4, 2007 to
form NYSE Euronext, the "first global stock exchange".
 The Euronext 100 Index is the blue chip index of
Euronext. It comprises the largest and most liquid stocks
traded on Euronext. Each stock must trade more than 20
percent of its issued shares over the course of the rolling
one year analysis period. The index is reviewed quarterly
through a size and liquidity analysis of the investment
universe.
 As of January 2011, there are 1152 listings.
Tokyo Stock Exchange
 TSE is the third largest stock exchange in the world by
aggregate market capitalization of its listed companies. The
TSE had 2,414 listed companies with a combined market
capitalization of US$3.1 trillion as of Dec 2010.
 Stocks listed on the TSE are separated into the First Section
for large companies, the Second Section for mid-sized
companies, and the Mothers (Market of the high-growth and
emerging stocks) section for high-growth startup companies.
 The exchange's normal trading sessions are from 09:00am to
11:00am and from 12:30pm to 3:00pm on all days of the
week except Saturdays, Sundays and holidays declared by
the Exchange in advance.
 Nikkei 225 is the major stock market index for the TSE.
It has been calculated daily by the Nihon Keizai Shimbun
(Nikkei) newspaper since 1950. It is a price-weighted
average, and the components are reviewed once a year.
 Another major index for the Tokyo Stock Exchange is the
Topix.
Hong Kong Stock Exchange
 It is Asia's second largest stock exchange in terms of
market capitalisation, behind the Tokyo Stock Exchange. As
of 31 August 2010, the Hong Kong Stock Exchange had
1,356 listed companies with a combined market
capitalization of $2.3 trillion.
 The Hang Seng Index is a freefloat-adjusted market
capitalization-weighted stock market index in Hong Kong. It
is used to record and monitor daily changes of the largest
companies of the Hong Kong stock market and is the main
indicator of the overall market performance in Hong Kong.
These 45 constituent companies represent about 60% of
capitalisation of the Hong Kong Stock Exchange.
Shanghai Stock Exchange
 Shanghai Stock Exchange is the world's sixth largest
stock market by market capitalization at US$2.4 trillion
as of Aug 2010. Unlike the Hong Kong Stock Exchange,
the Shanghai Stock Exchange is still not entirely open to
foreign investors due to tight capital account controls
exercised by the Chinese mainland authorities.
 The securities listed at the SSE include the three main
categories of stocks, bonds, and funds. Bonds traded on
SSE include treasury bonds (T-bond), corporate bonds,
and convertible corporate bonds. SSE T-bond market is
the most active of its kind in China.
 There are two types of stocks being issued in the Shanghai Stock
Exchange: "A" shares and "B" shares. A shares are priced in the local
yuan currency, while B shares are quoted in U.S. dollars. Initially, trading
in A shares are restricted to domestic investors only while B shares are
available to both domestic (since 2001) and foreign investors. However,
after reforms were implemented in December 2002, foreign investors are
now allowed (with limitations) to trade in A shares under the Qualified
Foreign Institutional Investor (QFII) program which was officially
launched in 2003.
 The SSE is open for trading every Monday to Friday. The morning
session begins with centralized competitive pricing from 09:15 to 09:25,
and continues with consecutive bidding from 09:30 to 11:30. This is
followed by the afternoon consecutive bidding session, which starts from
13:00 to 15:00.
 The SSE Composite (also known as Shanghai Composite) Index is the
most commonly used indicator to reflect SSE's market performance.
Constituents for the SSE Composite Index are all listed stocks (A shares
and B shares) at the Shanghai Stock Exchange.
Toronto Stock Exchange
 Toronto Stock Exchange (TSX) is the largest stock
exchange in Canada, the third largest in North America
and the eighth largest in the world by market
capitalization.
 The exchange has a normal trading session from
09:30am to 04:00pm ET and a post-market session from
04:15pm to 05:00pm ET on all days of the week except
Saturdays, Sundays and holidays declared by the
Exchange in advance.
 As of November 2010, Toronto Stock Exchange had
1,498 listed companies
 The S&P/TSX Composite Index is an index of the stock
(equity) prices of the largest companies on the Toronto
Stock Exchange (TSX) as measured by market
capitalization. The Toronto Stock Exchange listed
companies in this index comprise about 70% of market
capitalization for all Canadian-based companies listed on
the TSX.
 The Toronto Stock Exchange is the leader in the mining
and oil & gas sector; more mining and oil & gas
companies are listed on Toronto Stock Exchange than
any other exchange in the world.
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