International

Financial Markets
 Financial H
Internatio
Markets i!
nal Financial
Markets
 TABLE OF CONTENTS
01 02
Introduction Current Status of
International
Financial Markets

03
Potential Growth or
04
Present or Future
Recent Risks of
Developments of International
International Financial Markets
Financial Markets
 TABLE OF CONTENTS
01 02
Introduction Current Status of
International
Financial Markets

03
Potential Growth or
04
Present or Future
Recent Risks of
Developments of International
International Financial Markets
Financial Markets
 The International Financial Market is the worldwide marketplace
in which buyers and sellers trade financial assets such as stocks,
bonds, currencies, commodities and derivatives, across national
borders. It can be seen as a wide set of rules of institutions where
assets are traded between agents in surplus and agents in deficit and
where institutions lay down the rules. It consists of mainly
international banking services and international money market.
01 Introduction
The banking services include the services such as trade financing,
foreign exchange, foreign investment, hedging instruments such as
forwards and options, etc. All these banking services are provided by
international banks. The international money market includes the
Eurocurrency markets, Euro credits, Euro notes, Euro Commercial
 TABLE OF CONTENTS
01 02
Introduction Current Status of
International
Financial Markets

03
Potential Growth or
04
Present or Future
Recent Risks of
Developments of International
International Financial Markets
Financial Markets
 Current Status
02of International
Financial
Markets
 The rapid spread of coronavirus (COVID-19) has dramatic impacts on financial
markets all over the world. It has created an unprecedented level of risk, causing
investors to suffer significant losses in a very short period of time. The economic
impact of the global spread of COVID-19 has heightened market risk aversion in
ways not seen since the global financial crisis. Stock markets have declined over
30%; implied volatilities of equities and oil have spiked to crisis levels; and credit
spreads on non-investment grade debt have widened sharply as investors reduce
risks.
 Substantial increases of volatility are found in global markets due to
the outbreak. Global stock markets linkages display clear different
patterns before and after the pandemic announcement. Policy
responses may create further uncertainties in the global financial
markets.
 International financial markets have expanded substantially, and
transaction volumes in foreign exchange markets and capital markets
have increased markedly. Progress in information and
telecommunications technologies, liberalization in capital markets,
and development of new financial instruments have further
stimulated international capital flows, leading to more expansion and
efficiency in international financial markets.
 World financial markets are highly integrated, and transactions have
become increasingly complex. These phenomena are reflected in
cross-listing of securities in several countries, cross-country hedging
and portfolio diversification, and 24-hour trading in financial
instruments at exchanges around the world.
 TABLE OF CONTENTS
01 02
Introduction Current Status of
International
Financial Markets

03
Potential Growth or
04
Present or Future
Recent Risks of
Developments of International
International Financial Markets
Financial Markets
 Potential Growth or
03 Recent Developments of
International Financial
Markets
GROWTH OR DEVELOPMENT IN TERMS
OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
GROWTH OR DEVELOPMENT IN TERMS
OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
 RISK
MANAGEMENT

 The innovation and progress in the area of risk

management has been enormous, and has changed the
nature of banking in fundamental ways. The growth of
credit derivatives and securitization has brought new
possibilities to banks to manage their risks actively.
GROWTH OR DEVELOPMENT IN TERMS
OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
 RAISING CAPITAL

 Firms use the global financial markets to Raise capital.

The depth and liquidity of the global financial markets
help companies reduce their capital costs, improve
GROWTH OR DEVELOPMENT IN TERMS
OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
 CHANNELS FOR FINANCIAL
TRANSACTIONS

 Many of the channels used for financial transactions have also

changed. There has been a major shift, relatively, from banks to
nonbank financial intermediaries, such as brokerage houses,
securities firms, insurance companies, and pension funds. There has
also been a shift from loans to securities and a rise in the use of
foreign financial centers. 
GROWTH OR DEVELOPMENT IN TERMS
OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
 INTERACTIONS OF
MARKET PARTICIPANTS

 Interactions among markets, which have been facilitated by

technological innovations, have provided market participants with
opportunities to diversify, hedge, and increase profits on their
investments, thereby promoting the use of new financial products
GROWTH/DEVELOPMENT IN TERMS OF:

RISK MANAGEMENT

WORLD OF RAISING CAPITAL

INVESTING

INTERACTIONS OF CHANNELS FOR

MARKET FINANCIAL
PARTICIPANTS TRANSACTIONS
 WORLD OF INVESTING

 Adding meaning to ESG through data Technology and greater analytics will
continue to change the world of investing and could present an opportunity for
firms looking to provide meaning to the Environmental, Social, and Corporate
Governance investment process. There is clearly a gap in the consistency and
applicability of third-party benchmarks which is leading many asset managers
to develop their own proprietary benchmarks for ESG that may differ from
industry to industry. This is a positive development for capital markets
because it ensures a more proportionate response to the ESG challenge, while
 TABLE OF CONTENTS
01 02
Introduction Current Status of
International
Financial Markets

03
Potential Growth or
04
Present or Future
Recent Risks of
Developments of International
International Financial Markets
Financial Markets
 Present or
Future Risks of
International
Financial 04
Markets
 RISKS
DETERIORATION
OF ECONOMIC
AND MARKET
CONDITIONS

NSIFIED FINANCIAL CONSTRAINTS HIGHER TRANSACTION COSTS

RISKS IN PRICES
AND MARKET CURRENCY VOLATILITY
VOLATILITY

LIQUIDITY
 DETERIORATION OF ECONOMIC
AND MARKET CONDITIONS

 In many countries, businesses have become highly

indebted, and are now vulnerable to deteriorating
economic and market conditions. Pressure on the
credit market persists in the wake of recession in
many economies and subdued corporate performance,
 HIGHER
TRANSACTION
COSTS

 The biggest barrier to investing in international markets is the

added transaction cost. Transaction costs still vary greatly
depending on which foreign market you are investing in.
Brokerage commissions in international markets are almost
always higher than U.S. rates. On top of the higher brokerage
commissions, there can be additional charges specific to the local
 CURRENCY
VOLATILITY

 When investing directly in a foreign market (and not through

American depositary receipt (ADR), it first has to exchange
U.S. dollars into a foreign currency at the current exchange
rate. It holds the foreign stock for a year and then sells it. That
means it will have to convert the foreign currency back into
 LIQUIDITY RISKS

 Another risk inherent in foreign markets, especially in

emerging markets, is liquidity risk. This is the risk of
not being able to sell an investment quickly at any
time without risking substantial losses due to a
 RISKS IN PRICES AND
MARKET VOLATILITY

The COVID-19 outbreak, the prices of risk

assets collapsed and market volatility spiked,
while expectations of widespread defaults led
 INTENSIFIED
FINANCIAL
CONSTRAINTS

Emerging market economies experienced the

sharpest reversal of portfolio flows on record.
As a result, financial conditions tightened at
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