International Capital Markets

- Prajwal V J
International Capital Markets
Group of markets that trade different types of financial and
physical capital (assets)

• Stocks, bonds
• bank deposits denominated in different
currencies
• Commodities, forward contracts, futures
contracts, swaps, options contracts
• real estate and land
• factories and equipment
INTERNATIONAL BOND MARKET
 A financial market where participants buy and sell
debt securities are usually in the form of bonds
 It is a market for bonds that are traded beyond
National boundaries normally these bonds are issued
in issuer as domestic currency
 A bond is issued in a country are currency other than
that of the investor or broker
FEATURES OF INTERNATIONAL BOND
 It is a debt market
 It is a rising market
 Fixed income instrument
 Issued in foreign currency at channelising savings

Classification of bonds
 Foreign bonds
 Eurobonds
 Global bonds
Advantages
 Are diversification
 Foreign market exposure
 High yield hedging

Disadvantages
 Country risk
 Currency Volatility
 Transaction costs are high
 Liquidity often low
International Equity market
 A market consisting of all stocks bought and sold outside the
issuers home country
 International equity market allows corporations to sell blocks of

shares to investors in a number of different countries

simultaneously
 Around 90% of the total market capitalization of the world's

equity markets is accounted for by the market capitalization of

the developed World
 Other 10 percentage accounted for market capitalization of
developing countries in emerging markets
 Equity markets of the developed World tend to be much more

liquid than emerging markets

Market Structure
 Primary markets
 Secondary market
Trading practice
 Dealer market
 Auction market
 Automated exchanges
Major benchmarks
North America, Europe, Asia
 Trading in International equities
Cross listing of shares
• It refers to a firm having its equity shares listed on one or more foreign
exchanges
• The number of firms doing this has exploded in recent years
Advantages
• It expands the investor base for a firm
• Establishes name recognition for the firm in new capital markets paving
the way for new issues
Yankee stock offerings
• The direction of equity capital to US public investors by foreign firms

Global Registered Shares (GRS)

• Fully transferrable that can be traded globally

American depository receipts

• Foreign stocks of an trade on us exchanges as ADRs
• It is a receipt that represents the number of foreign shares that are
deposited at a US bank
• The bank service as a transfer agent for ADR
Factors affecting international equity returns
• Microeconomic factors
• Exchange rates it appears story in force in stock
market movement within that country
• Industrial structure
THANK YOU