Current international financial market

1. Current international financial market TESSIE CHENG-CUA

2. financial market • A market in which people and entities can trade • financial securities, commodities, and other fungible items of value • at low transaction costs and at prices that reflect supply and demand. Tessie Cheng-Cua

3. Financial market Securities: • stocks • bonds • commodities: • precious metals • agricultural goods Tessie Cheng-Cua

4. Financial market • Markets work by placing many interested buyers and sellers • which include households, firms, and government agencies • in one "place", thus making it easier for them to find each other. Tessie Cheng-Cua

5. functions of financial markets • Transfer of resources • Productive usage • Capital formation • Enhancing income • Price determination • Sales mechanism • Providing liquidity Tessie Cheng-Cua

6. Types of Financial market In terms of number of types of items being traded: • General markets – where many commodities are traded • Specialized markets - where only one commodity is traded Tessie Cheng-Cua

7. Types of Financial market Based on levels of trading: • Primary market • Secondary market Based on types of items being traded: • Money market • Capital market • Derivative market • Depository market • Non-depository market Tessie Cheng-Cua

8. Types of Financial market Under the Capital market: • Equity market • Debt market Under the non-depository market: • Commodity market • Insurance market • Foreign exchange market or currency market Tessie Cheng-Cua

9. Relationship between lenders and borrowers Tessie Cheng-Cua

10. Analysis of financial markets • Dow Theory – using market trends to predict future changes • Random walk hypothesis – next change is not correlated to the last change • Technical concepts – use of algorithmic and high frequency program, adoption of momentum, ultra-short term moving average and other similar strategies not based on market behavior Tessie Cheng-Cua

11. International financial Markets • International financial markets are the economic conduits through which companies and individuals of various countries finance a variety of initiatives, such as funding startups as well as corporate mergers and acquisitions. • Also known as a securities exchange or stock market, an international financial market allows diverse pools of investors from all over the world to buy and sell shares of equity. Tessie Cheng-Cua

12. financial exchanges: • Physical exchanges – stock exchanges on site • Electronic market – wired or via the internet Tessie Cheng-Cua

13. Financial Market trends • By 1995, international trade peaked at $1 trillion, or half the world's Gross Domestic Product. • Globalization proponents cite such figures to support claims that economies cannot prosper without unrestricted trade • When government policies meet businesses' disapproval, international mobility of capital allows investors to go elsewhere. Tessie Cheng-Cua

14. Financial Market trends • Increased capital mobility often accompanies government policies seen as overly restrictive toward businesses. • One example is France's wealth tax, which has netted about $2.2 billion since 1998 up to 2006. During the same period, an exodus of wealthy entrepreneurs cost the country about $126 billion capital crossing the border. • Many French expatriates move to European Union nations with more business-friendly laws, such as Belgium and the United Kingdom. Tessie Cheng-Cua

15. Financial Market trends • Capital mobility often follows the growth of new markets. • About 40 percent of the profits for U.S. firms listed on the S&P 500 stock index now come from overseas, according to "U.S. News and World Report." • This point was overlooked amid anger about job losses to emerging markets in China, India and Latin America. • Capitalizing on such opportunities allows firms to earn healthier profits than if they relied on the struggling American and European U.S. economies, the magazine states (2009). Tessie Cheng-Cua

16. leading stock exchanges of the world • New York Stock Exchange or NYSE Euronext • London Stock Exchange (FTSE 100) • Tokyo Stock Exchange • Hong Kong Stock Exchange • Frankfurt Stock Exchange (DAX 30) • Shanghai Stock Exchange • Euronext Paris (CAC 40) Stock Market Indices: • National Association of Securities Dealers Automated Quotations (NASDAQ) • Standard & Poor’s 500 (S&P 500) • Phil. Stock Exchange Composite Index (PSEi) Tessie Cheng-Cua

17. Foreign Exchange • Forex is an international interbank market. • Operations are carried out through such institutions as central banks, commercial banks, investment banks, brokers and dealing centres, retirement funds, insurance companies, transnational companies etc. • The volume of one contract with a delivery of real currency on the second working day usually amounts to millions of dollars. Tessie Cheng-Cua

18. Europe Markets March 4, 2013, 4:12 a.m. Europe stocks key off Asia losses, miners fall By Sara Sjolin, MarketWatch LONDON (MarketWatch) — European stock markets staged broad-based losses on Monday, tracking a weak sentiment in Asia, where Chinese real-estate stocks tumbled after the country tightened property-mortgage rules. The Stoxx Europe 600 index dropped 0.5% to 287.59, adding to a 0.3% loss from Friday. Mining firms posted some of the biggest losses in the pan-European index, after the Chinese government late Friday announced fresh measures to cool the property market, including higher down-payments and mortgage rates on second homes in cities with steep price gains. China is a major user of natural resources, and any indicators of a slowdown in the economy and the construction sector tend to weigh on mining firms. Tessie Cheng-Cua

19. Europe stocks mirror losses in China, where the government tightened property-mortgage rules. The losses for mining firms weighed on the U.K.’S FTSE 100 index which erased 0.6% to 6,343.59. Among other notable decliners, shares of HSBC Holdings dropped 2%. The heavyweight bank reported a 2012 net profit of $14.02 billion, down from $16.8 billion a year earlier. The CAC 40 index shed 0.3% to 3,690.57. And in Germany, the DAX 30 index traded 0.6% lower at 7,663.60. Tessie Cheng-Cua

20. Credit ratings • Evaluation of the credit worthiness of a debtor, especially a business or a government. • An evaluation made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default. • evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Tessie Cheng-Cua

21. Credit rating agencies Largest credit rating agencies which operates worldwide: • Dun & Bradstreet • Moody's • Standard & Poor's • Fitch Other agencies: • A. M. Best (U.S.) • Baycorp Advantage (Australia) • Egan-Jones Rating Company (U.S.) • Global Credit Ratings Co. (South Africa) • Levin and Goldstein (Zambia) • Japan Credit Rating Agency, Ltd. (Japan) • Rapid Ratings International (U.S.) • Public Sector Credit Solutions (U.S.) Tessie Cheng-Cua

22. Credit ratings • not based on mathematical formulas but the use of judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government • Used by individuals and entities that purchase bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations. Tessie Cheng-Cua

23. Poor credit rating • Indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects sovereign credit rating • indicates the risk level of the investing environment of a country and is used by investors looking to invest abroad. It takes political risk into account. Tessie Cheng-Cua

24. Country risk rankings (January 2013) A. M. Best defines "country risk" as the risk that country-specific factors could adversely affect an insurer's ability to meet its financial obligations. Tessie Cheng-Cua

25. Corporate credit ratings Tessie Cheng-Cua

26. Sovereign credit rating Tessie Cheng-Cua

27. Sovereign credit rating Tessie Cheng-Cua