Financial Market Analysis

This report analyzes the financial markets of the UK and India, examining capital allocation within domestic and international contexts. It evaluates the emerging economy of India, highlighting its strengths and challenges, and critically examines the impact of industrialization and trade policies on both countries. The report provides insights into investment opportunities and potential risks associated with these markets. Desklib provides past papers and solved assignments for students.

ASSIGNMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Background of Financial market.................................................................................................1
Capital allocation with domestic economy.................................................................................2
Capital allocation with international markets.............................................................................3
Evaluation of emerging economy of your choice.......................................................................4
Critical evaluation of challenges that country faces due to industrialisation and trade policies.7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International investment decisions have been based on analysing various economic, political
and social factors relevant with the country. In the present report there will be analysis over the
domestics’ market as UK as well as Emerging market as India. Moreover, in respect with such
analysis there will be use of various techniques and methods which will be indicative and helps
in terms of meeting requirement of international investment decisions. there will be analysis over
the economic scenario of UK and India with the purpose of making investment in the nation.
Background of Financial market
Financial market is considered as broad term which describes about marketplace where
various securities are traded such as equities, currencies, derivatives and bonds occur. It is place
where individuals are engaged with type of financial transaction where sellers and buyers are
involved in purchase and sale of financial products as shares, mutual funds and so on. The prices
of financial market might not indicate true intrinsic value of stock because of various
macroeconomic forces such as taxes. Aggregately, securities prices are heavily reliant on
informational transparency for purpose of ensuring efficiency along with appropriate prices set
through market. It could be classified with nature of claim, maturity of claim, timing of delivery
and organizational structure. On basis of nature of claim it is categorised as debt and equity
market as debt market where fixed claims along with debt instruments like bonds or debentures
which are purchased and sold among investors. In the similar aspect, equity market where
investors directly deal with equity instruments as it is market for purpose of residual claims
(Matvos, Seru and Silva, 2018).
The maturity through claim it is classified in money and capital market as in money
market is with monetary assets along with commercial paper, treasury bills, certificate of
deposits etc. which will directly mature in a year which will be traded. This is market for funds
of short term as no market exist physically as transactions will be performed with virtual
network. The capital market where medium and long term financial assets are traded as it is also
categorised in two types such as primary and secondary market. On basis of timing of delivery, it
has cash and future market as in cash where transactions along sellers and buyers are directly
settled in real time. In future market is one with delivery along with settlement of commodities
would be undertaking for future specified date. With context of organizational structure, it is of
exchange traded and over the counter market as in exchange is financial market where
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organization is centralised with procedure in standardised aspect. Further the over the counter
market, it is through decentralised business entity which will be having procedures in customised
aspect (Fischer and Krauss, 2018).
The most important role is of financial market is for mobilising its savings and puts with
various productive application. This will help for identifying securities price and presence of
frequent interaction among investors which will directly fix securities price with context of
demand and supply in market. This will be giving liquidity for tradable assets as it will facilitate
exchange as investors could sell securities and transforms assets to cash. Henceforth, it saves
money, efforts and times as they will not waste resources for extracting probable sellers and
buyers of securities as this will be decreasing cost by giving valuable information related to
securities traded in financial market. The financial market might not have presence of physical
location such as exchange of asset among parties which could take place over phone and internet
as well (Lumsdaine and Potter van Loon, 2018).
Capital allocation with domestic economy
The function of capital allocation is of asset managers as it is significant facilitator of UK
company funding which will contribute to growth for long term productivity. It capability is
broad as this will extend for multiple asset classes and structure of funding along with supplies
funds over the whole economic cycle. The capital allocation will attain success as it will
facilitate potential for holdings of long term and it will allow for involvement of long term with
organizations. The asset managers will be holding equity of UK for average of six years as it will
be longer than its own clients which will hold investment in its pooled funds. The role of asset
managers in engagement and stewardship has been raised with reflection of long term
relationship which could facilitate supply of innovative finance. It had shown long term
relationship which will facilitate significance of issue of shares (Epstein, 2018).
There is observance of lens of equity dominated cycle as in recent year its function as
debt managers which are very important with reference to alteration in landscape of capital
markets as it will help business entity for maintaining access to new capital and for decreasing
cost of capital through switching via bank as it will lend to cheaper financing of bond.
Furthermore, the financing channels will be diversified as investment in debt will extend market
of public corporate debt with alternative form of debt finance and via varietal of infrastructure
projects as it will consider social housing as well (Groh and et.al., 2018).
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On macroeconomic level, the asset managers will be giving important investment channel
among financial markets and investors. The capital allocation in efficient with different
applications along with risk of proper pricing. The pooling of funds is highly cost effective for
purpose of investors with different sophistication and size with advantage of economies of scale.
Further, the creation of liquid market in securities will be allowing for cost efficient trading
related to securities in both large and small blocks. Thus, it will be giving cost effective method
for mitigating information asymmetry among organizations and various other types of investors.
In this behalf, there is participation in primary and secondary market with selling and buying
securities on clients' aspect with basis of investment strategy. The funds will be channelled to
business with requirement of additional funding for undertaking innovative investment. There
will be clear interaction among these functions. It will be feeding for decisions about efficient
capital allocation in primary market and it delivers advantages to wider economy with
perspective of investment in real productivity capacity (Shang and et.al., 2018).
In capital allocation in UK as domestic market, with growth of bond financing and
decrease in equity financing has reflected both supply and demand side factors as it will include
accounting and regulation standards which are key influence on insurance company and pension
fund with decisions of asset allocation. It will be encouraging increment in demand for bonds.
Capital allocation with international markets
Financial markets seem to change the allocation of capital – across 65 countries and with
financial markets which are developed have increased the investment more in growing
industries. One of the fundamental jobs of the economy of a nation can be defined as allocation
of its scarce capital efficiency. Capital is generally invested in those sectors which have high
returns and is withdrawn from the sectors which have poor prospects. In allocation the capital in
the international market one of the driven force has been identified by the economist as financial
markets which actually improves the allocation of the capital (Korinek, 2018). The elasticity of
investments in the industry adds in the value with several times in Germany, Japan, the United
Kingdom, and the United States as compared to the undeveloped counties such as Bangladesh,
India, Panama, and Turkey. For allocation of the capital in the international market feature that
requires to be taken in account are related with financial development in the economy of nation.
Another key factors that is evaluated with allocating the financial resource in the
international market and industry is related with elasticity of finance to investment opportunities.
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In several researches it has been found out that the elasticity of credit to current and future
productivity depending on capital market frictions of a particulate nation's economy. With
application of the novel firm level data base of the competitive Research network which was
established by EU system of Central Banks the facts are determined that credit efficiency across
different economies depend on the creditability of the economy of that particular country. With
improvement in the allocation of capital by the main channels through which financial
development gets improved and accelerates economic growth.
Before allocation of capital in an internal market and a different economy factors that must
be evaluated are related with:
Diagnose: this is related with determination of the performance at a coarse level. One of the
key factors to identify this is benchmarking the capital markets and comparing it with GDP. The
nation with stable GDP rather than with fluctuating GDP is given more preferences.
Design: the market with more suitability is preferred over faster development (Samarina and
Bezemer, 2016). This means to developing economies are more suitable for investment of the
capital resources by the organisation based in UK.
Implement: mean to take into account the nationwide change in the approach of the
management. Measure must be taken by the policy makers to provide advises on emerging
economies.
Evaluation of emerging economy of your choice
In respect with analysing an emerging economy on which India have been ascertained to
have effective analysis over the data base. In relation with the general overviews of Indian
economy on which there are various factors which will be helpful in addressing the capabilities
of nation in respect with meeting the operational targets at the right time. Therefore, have been
various favourable and unfavourable factors which are required to be demonstrated by the
investors in relation with making investment in India (Cohn, 2017). In consideration to the
positive factors there are will be fall in the prices of oil, favourable governmental policies which
is beneficial to the businesses. There will be adequate demographics as well as increment in the
middle-class activities. Along with this, as per considering the financial market of the nation
which is well regulated and having consistent outcomes.
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Thus, with respect with the capital market stability in this nation on which it can be said
that there must be appropriate improvement and increment in the profitability with concerning
the development of various policies and governmental techniques. As per demonstrating the
negative economic factors on which it can be said that there will be issues relevant with the
exports which were being suffered due to global weaknesses in the nation. moreover, there are
challenges which have been faced by them mainly in making exports of resources.
Moreover, there have been various factors which are required to be considered by an
investor which will be helpful to them in making adequate investment in India (Mohanty and
et.al., 2017). In consideration with the economic factors such as GDP value, Inflation rates as
well as exchange rate in the country which will be effective in analysing the economic stability
in the nation.
Indian GDP rate:
In relation with the Moody’s reviews on which it has cut the GDP rate to 7.3% to 7.5%.
Therefore, this approach was made in context with making prediction based on increasing oil
prices in the market. Moreover, India is the biggest supplier of spices and wheat production in
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the world. therefore, their main growth and economic stability is based on its agriculture sector.
Thus, development of such sector will be adequate in managing the capital stability in the nation.
It has been predicted here that GDP will have proportionate increase more than 10.3%. therefore,
the estimation has been based on increment of per capita income in the nation. the changing
policies, tax rates and various regulations will be adequate for economic development.
Thus, in relation with such outcomes on which it can be said that, the growth in the
national economy which will reflect in making adequate development of various data base
(Gupta, 2017). India will be profitable and beneficial to investor in respect with making FDI or
retaining the appropriate returns. The raiser in economy ability will be effective for the nation to
retain favourable gains.
Inflation rate in India:
This is the factors which indicates the rise of prices in the goods and services of and
economy. In respect with making adequate analysis over the data base which affects in having
negative impacts on national growth (Singh and et.al., 2017). However, the raise in inflation rate
of the nation will have negative impacts on the raising prices for petroleum products which have
been used in the economy. Oil and grocery prices in an economy will affect the economic wealth
and per capita income of the society. with the influences of such factors on which it can be said
that, there will be development of various plans and policies which will may affect the growth of
nation.
Along aside it has been determined here that there will be positive increment and
development of national economy as predicted by economist that inflation in India will be
controlled (Inflation rate in India, 2018). The raise in interest rates which were being charged
mong the debts in inter banking operations have encouraged the rias of inflation in nation
therefore, controlling interest rates and making adequate policies will help nation in controlling
the debts and managing the inflation of the nation.
Interest rate of India:
In India there have been various rules and policies which have been made by reserve bank
of India. Therefore, they make inter banking transactional policies and producers to overcome
with economic challenges (Cohn, 2017). In respect with developing policies and plans which
will help the nation in increasing the currency value will be helpful in retaining the adequate
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returns. Thus, with respect to the banking policies and governance of RBI it can be said that
making investment India will be fruitful to the nation in relation with retaining adequate gains.
Critical evaluation of challenges that country faces due to industrialisation and trade policies.
The main challenge is to switch about primary commodities with question for advancing
in industrial development. Many countries with huge population has huge numbers of workers
which are unemployed must be absorbed about services in industry. As per global glut in low
skilled labour- intensive manufacturers for purpose of FDI with location of segment of labour
intensive of IPNs. This will be disrupting the process of development with cause of significant
terms of trade losses and cause very serious frictions in global trading system. The factor with
increment of risk is continued with protectionism in industrial countries against with
manufacturers which are labour intensive as exported through developing countries.
The mounting pressure in countries which are industrialised for increasing level of
protection stem with coincidence for level of high unemployment and growth in inequality wage
in these countries with sharp increment in labour intensive manufacturers are directly exported
through developing countries. In the similar aspect, there are various sectors where industrial
countries do not have chance to regain its competitiveness with major adjustment of wages as
productivity will be provided in multiple developing countries in such sectors which are high and
level of wage is considerably lower. Instead of trying to addressing difficulties arise through
raised competition for employing appropriate range of structural and macroeconomic policies for
accelerating growth and to upgrade skills and decrease unemployment and most industrial
countries have selected for protecting these industries on basis of tariff and non tariff barriers and
for abusing anti-dumping measures and technical, safety and healthy standards (Wood and et.al.,
2018).
The developing countries are facing issues as de-industrialisation has been occurring
along with services share at lower level of industrial productivity along with per capita income.
The most important is about happening in era of erratic and slow growth. It is fallacy for thinking
middle income countries with convergence towards level of income about industrialised
countries with rapid movement of services prior to attaining maturity of industry.
Simultaneously, limits of services for giving trade opportunities must be fully recognised as
number of services on basis of data processing, communication and health is moving to
developing countries with middle income along with required infrastructure and skills.
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The potential difficulties are averted in world markets for larger developing economies,
labour intensive manufacturers has requirement of utilising multiple domestic sources of growth
in full aspect. The domestic firms will be having weak technological and productive capacities
along with global economic on basis of characterised through asymmetric and biases, regional
arrangements might give very supportive environment for pursuing national development
strategies. For instance, manufacturing sector is traditionally oriented with perspective of
domestic markets, where regional context is highly beneficial for purpose of adapting pressures
on international competition and it could provide first step with close loop integration in
economy of world. As this process would be driven at initial markets as policy is very important
for facilitating integration about ensuring stability and sustainability (Eichengreen, 2018).
CONCLUSION
On the basis of above report, it can be concluded that UK and Indian economy will have
positive outcomes on which making policies and plans will be effective in terms of making
investments. India has been denoted as the emerging country in the international market on
which making investment in this nation will bring them adequate gains and profitability.
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REFERENCES
Books and Journals
Cohn, B. S., 2017. Notes on the History of the Study of Indian Society and Culture. In Structure
and change in Indian society (pp. 3-28). Routledge.
Eichengreen, B., 2018. Trade policy and the macroeconomy. IMF Economic Review. pp.1-20.
Epstein, M. J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Fischer, T. and Krauss, C., 2018. Deep learning with long short-term memory networks for
financial market predictions. European Journal of Operational Research. 270(2). pp.654-
669.
Groh, A. and et.al., 2018. The Venture Capital and Private Equity Country Attractiveness Index
2018.
Gupta, S., 2017. Knowledge economy: A need for social reformation. Journal of Management
Science, Operations & Strategies (e ISSN 2456-9305). 1(1). pp.16-20.
Korinek, A., 2018. Regulating capital flows to emerging markets: An externality view. Journal
of International Economics. 111. pp.61-80.
Lumsdaine, R. L. and Potter van Loon, R. J., 2018. Do Survey Probabilities Match Financial
Market Beliefs?. Journal of Behavioral Finance. 19(2). pp.209-220.
Matvos, G., Seru, A. and Silva, R. C., 2018. Financial market frictions and
diversification. Journal of Financial Economics. 127(1). pp.21-50.
Mohanty, S. and et.al., 2017. Forecasting of solar energy with application for a growing
economy like India: Survey and implication. Renewable and Sustainable Energy
Reviews. 78. pp.539-553.
Samarina, A. and Bezemer, D., 2016. Do capital flows change domestic credit
allocation?. Journal of International Money and Finance. 62. pp.98-121.
Shang, J. and et.al., 2018. The relationship between population growth and capital allocation in
urbanization. Technological Forecasting and Social Change.
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Singh, M. P. and et.al., 2017. Forest transition and socio-economic development in India and
their implications for forest transition theory. Forest policy and economics. 76. pp.65-71.
Wood, R. and et.al., 2018. Growth in environmental footprints and environmental impacts
embodied in trade: Resource efficiency indicators from EXIOBASE3. Journal of Industrial
Ecology. 22(3). pp.553-564.
Online
Inflation rate in India. 2018. [Online]. Available through :<
https://www.statista.com/statistics/271322/inflation-rate-in-india/>.
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