The Global Financial

Markets
Cin Mun Muan
The Global Financial Markets
• The Global Financial Markets (GFM) is a weekly publication that
reports key financial and macroeconomic information for both
developed and emerging markets.
• Currency exchange rates, stock markets and government bond
spreads are included for more than 50 countries in Latin America,
Asia, Africa Middle East and emerging Europe as well as other key
external vulnerability indicators.
• For the U.S., Europe and Japan, graphics and tables present
information on the health of credit and financial markets.
The Global Financial Markets
• Financial markets create liquidity that allows businesses to
grow and entrepreneurs to raise money for their ventures. 
• They reduce risk by having information publicly available to
investors and traders. 
• These markets calm the economy by instilling confidence in
investors. 
• Investor confidence stabilizes the economy.
Types of Financial Markets

• The Stock Market

• Stocks are forms of ownership of a public corporation that
are sold to investors through broker-dealers. The investors
profit when companies increase their earnings. This keeps
the U.S. economy growing. It's easy to buy stocks, but it
takes a lot of knowledge to buy stocks in the right company.
The Commodities Market

• A commodity market is where companies offset their futures

risks when buying or selling natural resources. Since the
prices of things like oil, corn, and gold are so volatile,
companies can lock in a known price today
Functions of Financial Markets

• Financial markets create an open and regulated system for

companies to acquire large amounts of capital. This is done
through the stock and bond markets. Markets also allow
these businesses to offset risk. They do this with
commodities, foreign exchange futures contracts, and
others.
International Bond Markets
• International Bond Markets are made up of two
basic bond types
• Eurobonds
• Foreign Bonds
Eurobonds
• A euro bond is an underwritten bond offered
through an international syndicate of investment
bank in countries other than the country in whose
currency the issue is denominated.
• Example
• US based firm issuing USD bonds in Europe and
Asia.
Foreign Bonds
• A foreign bond is an underwritten bond offered
by a foreign issuer in a country, and
denomination in the currency of that country.
• Examples
• Bulldogs German firm issuing GBP bonds in the
UK.
Challenges of International Finance

• Terrorism
• Terrorism is also main challenge of International Finance. If any country
will increase the terrorism in other country, its international finance will
affected. Motherland is first and then, there is any international finance.
Other countries which have the problem of terrorism, should strict ban on
it if it has to increase its international finance with other countries.
• Follow the Political Policies and Law of Nation
• If business people have to grow international finance in any country, they
have to make their policy according to the law and political policy of same
country.
 International Currencies
• International finance also affects from international currencies.
You have some foreign currency if you have to deal with foreign
country. At the time of dealing, you know what is the current
market rate of forex. If your own currency is low value, you
should wait for business, otherwise, your own capital will
decrease at fast rate.
Benefits of Financial Markets
• Financial markets provide finance for companies so they can hire, invest
and grow.
• For example, Apple started in a garage in California. While it had some
great ideas, it needed money to make them happen.
• In 1977, it persuaded a single investor to loan the company $250,000. Over
time, the company grew and less than five years later it was able to borrow
over $100 million from financial markets by selling shares in the company.
• Apple is now worth hundreds of billions of dollars and employs over
100,000 people.
• So, when they work well, financial markets can make the country much
better off.
Risks Associated With Financial Markets

• Systemic and Non-Systemic Risk

• Risks are typically one of two types: systemic or non-systemic.
A systemic risk is one that happens within a company or group of
companies that can create havoc throughout an entire industry,
sector, or economy.
• Non-systemic risk relates to one party or company and is also called
unsystemic or diversifiable risk. For example, a company might face
risks of substantial losses due to legal proceedings. If so, the shares
might be vulnerable if the company loses a lot of money due to an
adverse court ruling. This risk is likely to impact just one company
and not an entire industry.
Impact of Globalization on Corporate Finance
Risks
• Impact of Globalization on Corporate Finance Risks associated with
international business activity
• Political Risk
• Social Risk
• Economic Risk
• Importing and Exporting