World financial market

Theme #4

International Financial Markets

Financial Markets - A marketplace that provides an avenue for the sale and purchase of assets such as bonds, stocks, foreign exchange, and derivatives

Financial Markets - A marketplace that provides an avenue for the sale and purchase of assets such as bonds, stocks, foreign exchange, and derivatives

Common types of IFM

Common types of IFM

■ foreign exchange market

■ international money market

■ international credit market

■ international bond market

■ international stock markets

Do Financial markets need a specific building or location?

Functions of the Markets

Here are four important functions of financial markets:

1. Puts savings into more productive use;

2. Determines the price of securities;

3. Makes financial assets liquid;

4. Lowers the cost of transactions.

Foreign exchange markets

The foreign exchange market (Forex, FX, or currency market) is a global decentralized market for the trading of currencies.

The system used for exchanging foreign currencies evolved from the gold standard (1876-1913).

In terms of trading volume, it is by far the largest market in the world.

Average daily spot market operations exceed 1,5 trln dollars.

Trading in the US alone exceeds 200 bln dollars.

Hundreds of banks facilitate foreign exchange transactions, but the top 20 handle about 50 percent of the transactions.

Hundreds of banks facilitate foreign exchange transactions, but the top 20 handle about 50 percent of the transactions.

The top 10 largest banks in the world as of 28 July 2022

#1 Industrial and Commercial Bank of China (ICBC)
ICBC has $5,880 billion total assets according to the latest data, and its market capitalization amounts to $242 bln.
#2 China Construction Bank Corporation
According to the latest data, it has $5,045 billion in assets, and its market capitalization totals more than $171 bln.
#3 Agricultural Bank of China
Total assets of the Agricultural Bank of China comprise $4,868 billion, and according to the latest data, its market capitalization is $156 bln.
#4 Bank of China
According to the data, its assets currently amount to $4,327 bln, and its market capitalization is about $129 bln.

#5 JPMorgan Chase - Assets: $3.841 bln.

#5 JPMorgan Chase - Assets: $3.841 bln.

#6 Bank of America (BoA) - Assets: $3.238 bln

#7 Mitsubishi UFJ Financial Group - Assets: $3.079 bln.

#8 HSBC Holdings plc - Assets: $3.022 bln.

#9 BNP Paribas - Assets: $2.994 bln.

#10 Crédit Agricole - Assets: $2.367 bln.

What is Market Capitalization?

A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold.

A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold.

It consist of:

Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading.

Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading.

CAPITAL MARKET

COMMODITY MARKETS

The commodities market is where traders and investors buy and sell natural resources or commodities such as corn, oil, meat, and gold.

A specific market is created for such resources because their price is unpredictable.

Money markets

The money market is a component of the economy which provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less.

The core of the money market consists of interbank lending - banks borrowing and lending to each other using commercial paper, repurchase agreements and similar instruments.

Derivatives markets

The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options.

It provides instruments for the management of financial risk

Futures markets

A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange.

It provides standardized forward contracts for trading products at some future date.

Cryptocurrency

A cryptocurrency (or crypto currency or crypto for short) is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.

Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the release of bitcoin, over 7,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created.

It facilitates the trading of digital assets and financial technologies.