Capital Markets and International Investment

This assignment delves into the complexities of capital markets, both domestic and international. It examines various types of capital markets, highlighting their interconnectedness through international investments and funding activities. The impact of currency conversions, regulations, and financial advisor recommendations on investor behavior is analyzed. The study also scrutinizes recent stock market trends, including the post-election rally, dividend activity in the US, and the performance of indices like the Dow Jones Industrial Average and S&P 500. Furthermore, it explores the uncertainties surrounding Brexit and its potential implications for the EU capital market union.

Running head: FINANCE MANAGEMENT
Finance Management
Name of Student:
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Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Types of markets..............................................................................................................................2
Funding and Investment opportunities............................................................................................3
Assessing market performance........................................................................................................4
Contributory factors to 2015-2017 performance.............................................................................6
Opinion on 2018 outlook.................................................................................................................6
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................9

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Introduction
Dow Jones Industrial average is used as the standard gauge for the assessment of
economic health in United States. However, this particular index is able to consider only 30
companies and still considered as the leading stock exchange due to its broader scope and
excellence in representing U.S. Stock market. The different types to the early initiatives taken by
Donald Trump’s regime have reignited the confidence of the investors and they are able to depict
the factors affecting the capital market in a better way. The various actions taken by Trump have
been able to state on the introduction of new blue chip stock options. The inclusion of broader
S&P 500 benchmark is conducive in setting new highs for the rallies in economically sensitive
sectors. Dow Jones rose to a record-breaking 22,000 in August 2017.
The study has introduced the conceptualization of the different types of the market which
has been mainly discerned with debt and equity market. The report is seen to assess the various
types of the factors which can discern funding and investment opportunities, assessing
performance of the market and know about the contributing aspects for the performance in 2015-
2017. The report has further decided on the opinion for the 2018 foutlook for the capital market
standings1.
Types of markets
In general there are two main types of capital market. This has been depicted in form of
debt and equity market.
1 Horowitz, Noah. Art of the deal: Contemporary art in a global financial market. Princeton University Press, 2014.

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Debt Market- Debt market is seen as the where the investors are seen to buy and sell securities
mostly in form of bonds2. Debt market has been further considered as a substitute to channels for
finance. Some of the main forms of the debt funds have been discerned with long term debt,
short term debt, gift fund and monthly income plan (MIP). It has been also seen that debt market
has been seen with the obligation to put collateral for securing loan fund. At the same time the
funds can be raised otherwise also.
Equity market- This is identified with the issuing and trading of shares through exchanges
which takes place over the counter markets. This form of the market has been further termed as
the stock market and forms a vital aspect of the market economy. This has been further seen to
provide the investors slice of ownership in the organisation along the with realization of the
gains in the future. This form of market has been further discerned as the meeting point for the
seller and the buyers of the stock3.
Funding and Investment opportunities
International investment and the funding activities have been seen to be associated to the
various endeavours which affect the investing activities as a result of currency conversions to
foreign exchanges and regulations. At the same time it has been further discerned that the
financial advisors are seen to recommend on the holding of the stock for a diversified portfolio.
In addition to this, there have been several types of the other ways which has been taken into
account with the consideration of the different type the other factors associated to the exchanging
of currencies. The most common form of the investment in the foreign market has been
2 Rey, Hélène. Dilemma not trilemma: the global financial cycle and monetary policy independence. No. w21162.
National Bureau of Economic Research, 2015.
3 Bekaert, Geert, et al. "The global crisis and equity market contagion." The Journal of Finance 69.6 (2014): 2597-
2649.

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discerned with the consideration of “exchange traded funds (ETFs)” or mutual funds which has
been seen to be associated to the international stocks and bonds. The foreign holdings across the
multiple industries and the countries among the investors have been further seen with quick and
highly-diversified foreign exchange component in the portfolio4.
The various types of the investors has introduced sufficient amount of money in the stock
across the globe which has been seen with the opportunities, such as investing in shares. The
main opportunities in the capital market are evident with a mix of fiscal stimulus initiatives by
Trump administration along with the acceleration of economic growth and inflation.
The post election rally has been able to spend more amount of money, which has been
further seen to be stalled with total number of investors below 200005.
Assessing market performance
The depiction of the present situation of the market has been able to state on the early
initiatives taken by the Donald Trump in terms of improving the infrastructure and following the
different types of the policies which been seen with sending of the “Dow Jones Industrial
Average” to close above 20,000 for the first time. The broader sense of S&P 500 benchmark has
been considered with economically sensitive sectors which have been considered with the
executive decisions of Mr. Trump. Despite of the slower growth in the US dividend activity for
Q2 2017, the growth in terms of DJIA has been discerned with all time high of 22000 points in
August 2017. Aside from growing U.S. capital market, EU and UK market has been discerned
4 Valdez, Stephen, and Philip Molyneux. An introduction to global financial markets. Palgrave Macmillan, 2015.
5 Banerjee, Ryan, Michael B. Devereux, and Giovanni Lombardo. "Self-oriented monetary policy, global financial
markets and excess volatility of international capital flows." Journal of International Money and Finance 68 (2016):
275-297.

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with various types of the uncertainty with Brexit6. U.K. and European capital market are highly
interconnected. This is evident with three quarters of all the capital market business in the EU 27
taking place in U.K. It has been further discerned that U.K. could miss out on the potential
advantages of the capital market union projects. They have further warned that in the event of
Brexit it would either come to halt or become more inward looking project for the rest of EU
excluding UK. The various types of considerations for the emerging markets has been further
seen to be discerned as per the losses which has been be resulted with the hike in the US interest
rate and this hike in Asia and Nikkei has been further identified with the several consideration of
the Shanghai Composite remaining sluggish in the mid year7.
The closing of trading in New York was further seen to be decreased with 0.8% at
20068.5 and S&P has been further seen to close up by 0.8%. This has been further seen to be
depicted with small and domestically oriented companies8.
Contributory factors to 2015-2017 performance
The main form of the contributing factors to the financial performance has been further
seen to be based on the use of long term financing option. This particular consideration has been
based on the main form of the depiction which has been stated with the frequent use of financing
as per the time frame exceeding by a period of one year. The limited consideration of the finance
in the developing countries has been further seen to be evident among the smaller firms. The
bulk of the long-term financial aspects have been seen to be used by banks with the use of the
6 Bodie, Zvi. Investments. McGraw-Hill, 2013.
7 Georgiadis, Georgios, and Johannes Gräb. "Global financial market impact of the announcement of the ECB's asset
purchase programme." Journal of Financial Stability 26 (2016): 257-265.
8 Miranda-Agrippino, Silvia, and Hélène Rey. World asset markets and the global financial cycle. No. w21722.
National Bureau of Economic Research, 2015.

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public equity and private equity with limited firms of all sizes. The different types of the
consideration for the market failure has been further seen to be discerned as per the policy
distribution and misappropriation effect in the long term finance, and suggestions which has been
depicted in form of the important role of the policies addressed with several distortions and the
failures in the capital market. The contributory factors can be further discerned with other
aspects which have been identified with the key policy and overcoming the challenges for long
term finance, which is seen to be having an important role for economic growth and the sharing
of the prosperity. The first quarter of the present fiscal year has been identified with expanding
of the orders, promoting policies and improving the production and reducing the engineering
costs9.
Opinion on 2018 outlook
Based on the prediction of the capital market experts, the stock market crashes has been
considered as per the availability of the past data. As per the data of 2017, the IMF has been
discerned with lower growth forecast for capital market of US for 2018. This is has been evident
with a decrease of 2.1% from 2.5%. It has been further discerned that the various types of the
consideration of the stocks of US has forced the investors for paying attention to the incessant
calls for recession. In this particular article the biggest form of the stock market prediction has
been seen with the one year points target for S&P 500 to 2575, which has been seen with 6%
upside increment than the present levels. Capital market researchers have further considered one
of the most important forms of the market intelligence data with the various types of the
increasing nature of the one-year points target for S&P 500. This has been further seen to be
9 Haas, Ralph, and Iman Lelyveld. "Multinational banks and the global financial crisis: Weathering the perfect
storm?." Journal of Money, Credit and Banking 46.s1 (2014): 333-364.

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discerned in form of the 6% performance increment based on present levels. There have been
several types of the prediction which has showed bullish nature of the market prediction in 2018.
The stock market prediction has been further able depict 2700 points as the target for S&P 500.
The target has been further seen to imply 11% increment from the present levels of observation.
The sluggish stock market prediction has been further with the assessment of stock market crash
expected to take place in Japan in 2018. The world market has been predicted to be facing a
major situation of recession10.
Conclusion
The main aspect of the study has been able to highlight different types of capital market.
International investment and the funding activities have been seen to be associated to the various
endeavours which affect the investing activities as a result of currency conversions to foreign
exchanges and regulations. At the same time it has been further discerned that the financial
advisors are seen to recommend on the holding of the stock for a diversified portfolio. The post
election rally has been able to spend more amounts of money which is seen to be stalled with
total number of investors below 20000. The “Dow Jones Industrial Average” is seen to close
above 20,000 for the first time. The broader sense of S&P 500 benchmark has been considered
with economically sensitive sectors. Although there is slower growth in the US dividend activity
for Q2 2017, the growth in terms of DJIA has been discerned with all time high of 22000 points
in August 2017. Aside from growing U.S. capital market, EU and UK market has been discerned
with various types of the uncertainty with Brexit. U.K. could miss out on the potential
advantages of the capital market union projects. They have further warned that in the event of
10 Masciandaro, Donato, ed. Global financial crime: terrorism, money laundering and offshore centres. Taylor &
Francis, 2017.

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Brexit it would either come to halt or become more inward looking project for the rest of EU
excluding UK.

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Reference
Banerjee, Ryan, Michael B. Devereux, and Giovanni Lombardo. "Self-oriented monetary policy,
global financial markets and excess volatility of international capital flows." Journal of
International Money and Finance 68 (2016): 275-297.
Bekaert, Geert, et al. "The global crisis and equity market contagion." The Journal of
Finance 69.6 (2014): 2597-2649.
Bodie, Zvi. Investments. McGraw-Hill, 2013.
Georgiadis, Georgios, and Johannes Gräb. "Global financial market impact of the announcement
of the ECB's asset purchase programme." Journal of Financial Stability 26 (2016): 257-265.
Haas, Ralph, and Iman Lelyveld. "Multinational banks and the global financial crisis:
Weathering the perfect storm?." Journal of Money, Credit and Banking 46.s1 (2014): 333-364.
Horowitz, Noah. Art of the deal: Contemporary art in a global financial market. Princeton
University Press, 2014.
Masciandaro, Donato, ed. Global financial crime: terrorism, money laundering and offshore
centres. Taylor & Francis, 2017.
Miranda-Agrippino, Silvia, and Hélène Rey. World asset markets and the global financial cycle.
No. w21722. National Bureau of Economic Research, 2015.
Rey, Hélène. Dilemma not trilemma: the global financial cycle and monetary policy
independence. No. w21162. National Bureau of Economic Research, 2015.

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Valdez, Stephen, and Philip Molyneux. An introduction to global financial markets. Palgrave
Macmillan, 2015.