《国际财务管理》（英文版） Chap 8 International Equity Markets

Chapter Eight International Equity Markets Chapter objective This chapter discusses both the primary and secondary equity markets throughout the world

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition 8 Chapter Eight International Equity Markets Chapter Objective: This chapter discusses both the primary and secondary equity markets throughout the world

Chapter Outline o a Statistical Perspective Market Structure, Trading Practices, and Costs o International Equity market Benchmarks o World equity market Benchmark Shares o Trading in International Equities o Factors Affecting International Equity returns Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 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 o Market Capitalization of Developed Countries o Market Capitalization of Developing Countries o Measures of liquidity Measures of market Concentration Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. A Statistical Perspective ⚫ Market Capitalization of Developed Countries ⚫ Market Capitalization of Developing Countries ⚫ Measures of Liquidity ⚫ Measures of Market Concentration

Market Capitalization of Developed Countries o almost 90% of the total market capitalization of the world ' s equity markets is accounted for by the market capitalization of the developed world Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. ⚫ 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

Market Capitalization of Developing countries The other 10%o is accounted for by the market capitalization of developing countries in emerging markets atin america ■ASla Eastern Europe Mideast/ africa o Recently the growth rates in these emerging markets have been strong but with more volatility than we have here at home Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. ⚫ 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 o 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 Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 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 o 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 Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 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 compan ● Secondary markets Provide market participants with marketability and share valuation Irwin/McGraw-Hill Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 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 practices, and Costs ● Market Order an order to your broker to buy or sell share immediately at the market price ● Limit order An order to your broker to buy or sell at the at a price you want. when and if he can o If immediate execution is more important than the price, use a market order Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Market Structure, Trading Practices, and Costs ⚫ Market Order ◼ An order to your broker to buy or sell share immediately at the market price. ⚫ Limit Order ◼ An order to your broker to buy or sell at the at a price you want, when and if he can. ⚫ If immediate execution is more important than the price, use a market order

Market Structure Trading practices, and Costs Dealer market The stock is sold by dealers who stand ready to buy and sell the security for their own account In the u.s. the otc market is a dealer market ● Auction market Organized exchanges have specialists who match buy and sell orders. buy and sell orders may get matched without the specialist buying and selling as a dealer ● Automated Exchanges Computers match buy and sell orders Irwin/McGraw-Hill 8-<# Copyright o 2001 by The McGraw-Hill Commpanies, Inc. All rights

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Market Structure, Trading Practices, and Costs ⚫ Dealer Market ◼ The stock is sold by dealers, who stand ready to buy and sell the security for their own account. ◼ In the U.S., the OTC market is a dealer market. ⚫ Auction Market ◼ Organized exchanges have specialists who match buy and sell orders. Buy and sell orders may get matched without the specialist buying and selling as a dealer. ⚫ Automated Exchanges ◼ Computers match buy and sell orders