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Lecture Multinational financial management: Lecture 31 - Dr. Umara Noreen

After completing this chapter, students will be able to: A statistical perspective, market structure, trading practices, and costs, international equity market benchmarks, world equity market benchmark shares, trading in international equities, factors affecting international equity returns,. | INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition Lecture 31 International Equity Markets Chapter Objective: This chapter discusses both the primary and secondary equity markets throughout the world. Outline A Statistical Perspective Market Structure, Trading Practices, and Costs International Equity Market Benchmarks World Equity Market Benchmark Shares Trading in International Equities Factors Affecting International Equity Returns A Statistical Perspective Market Capitalization of Developed Countries Market Capitalization of Developing Countries Measures of Liquidity Measures of Market Concentration Almost 90% of the total market capitalization of the world’s equity markets is accounted for by the market capitalization of the developed world. Market Capitalization of Developed Countries The other 10% is accounted for by the market capitalization of developing countries in “emerging markets”. Latin America Asia Eastern Europe Mideast/Africa Recently the growth . | INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition Lecture 31 International Equity Markets Chapter Objective: This chapter discusses both the primary and secondary equity markets throughout the world. Outline A Statistical Perspective Market Structure, Trading Practices, and Costs International Equity Market Benchmarks World Equity Market Benchmark Shares Trading in International Equities Factors Affecting International Equity Returns A Statistical Perspective Market Capitalization of Developed Countries Market Capitalization of Developing Countries Measures of Liquidity Measures of Market Concentration Almost 90% of the total market capitalization of the world’s equity markets is accounted for by the market capitalization of the developed world. Market Capitalization of Developed Countries The other 10% is accounted for by the market capitalization of developing countries in “emerging markets”. Latin America Asia Eastern Europe Mideast/Africa Recently the growth rates in these emerging markets have been strong, but with more volatility than we have here at home. Market Capitalization of Developing Countries Measures of Liquidity The equity markets of the developed world tend to be much more liquid than emerging markets. Liquidity refers to how quickly an asset can be sold without a major price concession. So, while investments in emerging markets may be profitable, the focus should be on the long term. Measures of Market Concentration Emerging Markets tend to be much more concentrated than our markets. Concentrated in relatively few companies. That is, a few issues account for a much larger percentage of the overall market capitalization in emerging markets than in the equity markets of the developed world. Market Structure, Trading Practices, and Costs Primary Markets Shares offered for sale directly from the issuing company. Secondary Markets Provide market participants with marketability and share valuation. Market Structure, Trading .