International Trade Finance & Investment - Desklib

This report explains investment consultant in relation to client within which economy have to invest money that has been researched in report. The corresponding agreement with financial institution all around the world in order to maximise capital efficiency and manage counterparty risk. This extensive analysis will examine how financial markets work with their counterparts in order to decrease payment risk, and will finish with the final report's findings. Also it has been helping in covering allocation of economy as per international market and makes sure that every aspects in relation to United Kingdom has bee covered within it.

International Trade Finance
& Investment

Executive Summary
In this report investment consultant has been explained in relation to client within which
economy have to invest money that has been researched in report. The corresponding agreement
with financial institution all around the world in order to maximise capital efficiency and manage
counterparty risk. This extensive analysis will examine how financial markets work with their
counterparts in order to decrease payment risk, and will finish with the final report's findings.
Also it has been helping in covering allocation of economy as per international market and
makes sure that every aspects in relation to United Kingdom has bee covered within it.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Background of Financial Markets..........................................................................................4
Capital Allocation within Domestic Economy.......................................................................5
Capital Allocation within Domestic Economy.......................................................................7
Capital Application within International Markets..................................................................9
Evaluation of an Economy...................................................................................................11
Evaluation of challenges that the country faced due to Industrialisation and Trade Policies13
Conclusion ....................................................................................................................................14
Recommendations..........................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Trade finance means those set of tools that has been used by an organization in order to
conduct international transactions and events. This aspects includes different parties that helps in
business of trade finance they are banks, financial institution, credit rating agencies and many
more. The main advantage of trade finance is that it provides flexibility within payments
between two parties exporter and importer making payments done in more secure manner for
both the parties. Investment refers to an expenditure which is incur by firm making purchase of
an asset possible for generating long term wealth in near future. In the report things covered is
based over providing suitable advice to clients within which investment is required to be done of
money. Further, the report deals upon finance institution all over the world to use their capital
efficiently and risk are managed within it. Also the report deals upon how financial market
collaborate with their party over reducing risk of payment and finally concluding results in the
last part.
MAIN BODY
Background of Financial Markets
Financial markets means those market place within which trading over securities and
derivatives takes place over low transactions cost. In this major kinds of securities within which
buyers and sellers dealing in financial market which are shares, bonds, debentures and many
more. Further its classification has been done as follows:
 Over the counter market (OTC) – This is refer as that financial market within which
securities has been traded among buyers and sellers without any exchange of security like
NASDAQ and S&P 500. As per it securities which are less cost and no regulation is
required are deal within respective market(Liobikienė and Butkus, 2019).
 Money market- This has been refer to the market which makes securities having maturity
period over less then an year trading within buyers and sellers.
 Derivative market- It has been referred to those market place within which trading of
derivatives is done among buyers and sellers. Through derivative financial instrument

value is derived over an underlying asset. This is classify in certain categories which are
future, forward, options and swap(Ji and Zhang, 2019).
 Forex market- it has been refer over the market place within which trading of currencies
takes place within buyers and sellers of various countries. In this trading of securities
happening for example like euro and dollar.
Capital Allocation within Domestic Economy
(Source: Business investment in the UK: January to March 2018 provisional results, 2021)
This is based upon allocation or distribution of money within the people of economy
which makes boost possible of efficiency that makes profitability increased. The management of
firm seeks for making distribution of wealth possible in an way that it generates wealth for
shareholders.
Following are the importance of capital allocation are:
Helps to make investment – Investment is based over those expenditure which is done in order
to make purchase of asset generated over long term wealth within future. In this case when
economy is available over capital or financial resources that is easy for corporation and
companies which makes investment done in various avenues making generating of long term

wealth within future. This makes an organization and economy attain profit which raises GDP in
relation to economic development.
 Mergers and Acquisitions- Merger is that kind of corporate strategy which has been
used by two companies that has merged together for increasing business strength and in
case of acquisition a business strategy within which an company has acquired by an
organization and new company is completely different from previous ones. For example
C corporation is acquired by an corporation acquired by corporation and new name which
is C corporation then there is an example of acquisition(Ji and Zhang, 2019). If there are
lot of capital and financial resources that is based upon economy then it is easy for one
organization to merge with another company to acquire organization that has been
running under loss which is beneficial for both organizations. Hence purchasing
organization will acquire assets making organization will get money for paying debts and
settling amount of shareholders.
 Easy to pay dividends- This is considered as that part of organizations profit which is
required to pay to shareholders. Dividends are always paid out of organizations profit
when the company earns large profit then dividend is paid to shareholders. Retained
earnings are always earn when company earn profit is directly related to capital or
financial resources this would lead to rise profit of an organization and shareholders get
more dividends out of organizations profit.
 Easy money rotation- Capital allocation which has made money rotation among public
of economy. Hence people of an economy always available with optimum quantity of
cash present within there hand. They can use for making investment done in stock,
mutual funds and various other investment opportunities. Hence it is required to be
promoted in relation to habit of investment among people which makes financial boost
within an organization possible. This makes profitability as shares of organization while
purchasing shares.
 Payment of Debt- It refers to the loan which companies take from bank in order to either
to settle disputes their financial obligation or to invest in any prospective project. When
there is rotation of money in economy then it is easy for banks to give money to

companies to fulfil their financial obligation or it is also easy for companies to pay off
their debt to bank. Hence capital allocation always be better for both companies and
banks.
Capital Allocation within Domestic Economy
(Source: Business investment in the UK: January to March 2018 provisional results, 2021)
This refers to allocation or distribution of money among the people of economy in order
to boost the efficiency and increase the profitability (Glial, Memon and Gilal, 2021).The
management of firm seeks to distribute its wealth in such a way that it generate more wealth for
shareholder.
Following are the importance of capital allocation are:
 Helps to make investment – Investment means expenditure done business in order to
purchase asset for generating long term wealth in future. When economy is available with
lot of capital or financial resources then it easy for corporation and companies to invest in
different investment avenues to generate long term wealth for future. This would make
company and economy more profitable and will also lead to rise in GDP (Gross Domestic
Development) of an economy (Dewan, and Zahid, 2020).
 Mergers and Acquisitions- Merger is a corporate strategy in which two companies
merge together in order to increase business strength whereas Acquisition is a business

strategy in which one company is acquire by another company and form new company
which is completely different from previous one. For example- If B Corporation is
acquire by a corporation and form new name which is C Corporation then this is an
example of acquisition. When there are lot of capital or financial resources available in
economy then it is easy for one company to merge with another company or to acquire
another company which is running under loss this would be beneficial for both
companies. Hence, purchasing company will acquire assets of loss making company and
loss making company will get money to pay off its debts and settle off amount of
shareholder(Husni, 2020).
 Easy to pay dividends- This refers to the part of company’s profit which to pay to
shareholder. Dividends are always paid out of companies profit when the company earn
more profit, more dividend paid to shareholder or vice versa. Retained earnings are
always earn when company earns profit and profit is directly related to capital or
financial resources allocation to an economy. Hence, when economy has huge monetary
resources this would lead to rise in profits of company and shareholders get more
dividends out of company’s profit Roberts (Chore Moraes and Ferguson, 2019).
 Easy money rotation- Capital allocation lead to easy money rotation among public of
economy. Hence people of economy always available with optimum quantity of cash
every time in their hand. Which they can use for further investment in stock, Mutual
funds and many other investment options. Hence this promotes the habit of investment
among people which will financially boost the companies’ profitability as shares of
company rise when people purchase those shares (Dary and James, 2019).
 Payment of Debt- It refers to the loan which companies take from bank in order to either
to settle disputes their financial obligation or to invest in any prospective project. When
there is rotation of money in economy then it is easy for banks to give money to
companies to fulfil their financial obligation or it is also easy for companies to pay off
their debt to bank. Hence capital allocation always be better for both companies and
banks.

Capital Application within International Markets
(Source: Avner Offer, 2021)
It has been refers as that kinds of allocation or distribution of financial resource of an
organization outside domestic territory of country. Financial resources allocation within
international market is more profitable than domestic market as it covers different countries that
boost economic stability of domestic country.
Following are the importance of capital allocation with international markets are:
 Reduce risk- Allocation of money with international market facilitate companies
government and various other financial institution for borrowing or investing money
from other country that makes risk reduction over price exchange. Price exchange
generally happens when there is fluctuation within the price of currency. Hence there is
risk reduction as organization can exchange their currency with another country currency.
 Easily Diversification- Companies through this is able to diversify or change their
trading currency when downfall or loss within respective currency is dealing with
example. If an organization is dealing within US dollar and downfall has been noticed in
relation to its own currency then currency can be changed with another country as a result
of which domestic country rises.

 Higher returns and less borrowing cost- Generally an organization earn lucrative
returns within international market through less borrowing cost. Borrowing cost means
the cost that has been uses as incur cost by an business order to raise funds through
market. Hence this is the reason which makes attraction done for investment within
international market(Hou and Wu, 2019).
 Development of technology- Technology is highly develop in the field of international
finance. With the help of technology companies or parties can easily deal with
international currency matters with the help of their phones they can easily deal with
international money matters. Hence due to this technological innovation attracts lot of
business and corporates to invest in international market.
 Get to know rules and regulations of different currency- This makes investment
within international market of different countries. As per business or corporation will get
rules, regulations and laws of different countries. It make organization aware about
surroundings.
 Knowledge about global financial condition of different country- Through investing
in international financial market business get information about financial or economic
conditions of various countries. The information will help over knowing business which
makes investment done over respective country.
 Lot of job opportunities- Companies makes investment in international market always
require for making financial analysis done in international market and decide when an
organization should invest in the currency of that country or not. The financial analysis
are highly in demand as every organization makes individual decision on behalf of
organization regarding investment. This helps in becoming financial expert with huge
opportunity.
 Good Salary hikes- Generally companies those who hires financial analyst give good
hikes and promotion to them. Hence it is an on demand skill which company see in their
individuals now a days.

Evaluation of an Economy
(Source: UK Economy Must Get More Efficient, 2018)
The economy of UK has shown enormous growth within in the field of trade finance and
investment within recent time. In 2019, the financial sector earns 132 billion pound in the

economy of UK which is 6.9% of GDP of country. But during 2020 the economy of respective
country has shown a downfall because of COVID-19 pandemic disease which spread in whole
world. Due to which complete lock down was announced, so many businesses were closed due
to which people have lost their jobs(Gravina and Lanzafame, 2021).
As of now the economy of respective country is now start recovering as covid cases are
start getting down which making economy back on its feet once again. People are now start
moving to their jobs, Businesses are now start earning profit which is a good sign of rising
country’s GDP.
The economy is start recovering not as the same pace as it was on pre covid stage. During
lock down, every single person was at home and their source of income was completely stopped.
People were lost their jobs and businesses were also shut down. The loss of UK country that time
was around more than 500 billion pound, which will take years to cover it. At present respective
country is now in better financial position which makes it clear that it is now recovering from
that loss. Hence it is predicted that in next one or two years the economy of that country will be
in much better position.
Advised investment decision and related benefits in respect to UK.
Basis of comparison United Kingdom Malaysia
Tax benefits The country has huge tax
benefits and government
which provides tax with
incentives over encouraging
investors to make investment
done respectively.
In Malaysia government is
not able to provide tax
benefits.
High quality and low cost
labor
The labour in respective of
country is of high quality and
available at low cost which
makes attraction done of
investors to invest money in
that country.
In Malaysia country labours
are too expensive and are not
productive in nature also.
World class technology The technology of United In Malaysia technology also

Kingdom is an world class
level which makes investment
done in relation to money.
excellent which makes better
perspective achieved.
After analysing the above table with aspect of client should make investment within UK
as compared to Malaysia over several factors that makes tax benefits to be achieved which
provides investors purpose. In UK investors find high quality and low cost labour which is
nowhere to be found and Malaysia has low quality and rate of wage is too high but in UK several
investors attract for earning money in economy. There are various risk factors involved within it.
 Changes in currency exchange rate
 Political, economical and social factors
 Government rules and regulations
Evaluation of challenges that the country faced due to Industrialisation and Trade Policies
The support of new market makes financial innovation and most favourable financial
conditions and makes changes possible within trade policies that has changed economy with new
kind of corporate management in global economy operations(Ghosh and Yamarik, 2019).
Through the aid of industrialization it has been seen that majority of companies and global
economy which makes changes resulting in lower cost supply growth, low cost supply and high-
quality raw materials in various countries. There are challenges which is faced by them in the
process that are as follows:
 Productivity- The labour of UK is less productive in compression of another country like
USA and France. It has made government invested within training and development of
labour so much but there condition did not improved. Main reason behind lack of

productivity of UK's labour is that they are not technically sharp in order to work in big
industry.
 Skills- The human resource of UK country does not posses skills for working in big
industry. The government should focus on urgent requirement of skilful human resources.
Government has launched various courses upon polishing skills of human resource of
respective country.
 Brexit policy- This is another hurdle which takes place in industrialization policy of UK
which made UK get out of European Union. The government is another important reason
for down fall of industrialization in UK(Gabusi, 2017).
Conclusion
From the above discussion in the report it has been marked out that finance and
investment has very important role to play in relation over financial performance of a country.
There are various kinds of trade instruments making measurement done over financial
performance within country that is stock, derivatives, money market and many more. Investment
has been refer over expenditure which is done by an organization making acquiring over
generating long term wealth for future. Investment helps in boosting financial performance of a
country as it provide employment to unemployment people. These are factors which makes
country's economy defined with employment opportunity for people of country.
Recommendations
From the analysis the mentioned study it has been clarified that trade of finance and
investment plays critical role in making country's performance related to finance improved. It
deals with stock, derivatives, money markets, and other trade finance instruments which is used
for making assess over financial performance. These are explained as follows:
 Market changes: In this more individual perform digital due to COVOD-18 and urges
that business managers guarantee about employees skills which makes execution of job
possible. It makes aid in more complex execution of functions adaptable to digital
change.
 Digital transformation: It has been advised that business in respect of industry employ
makes digital transformation over adopting organization and marketplace to meet

demand. Data-driven transformation may be used for making effective management if
client. This makes large competitiveness achieved in effective manner.
 Innovation: It is advised that digital transformation be driven by innovation. In the
context of provided business, digital transformation may be enabled, and more
investment in research and development can be employed to support a better market
response.

REFERENCES
Books and Journals
Gabusi, G., 2017. “Crossing the river by feeling the gold”: The Asian Infrastructure Investment
Bank and the financial support to the Belt and Road Initiative. China & World
Economy, 25(5), pp.23-45.
Ghosh, S. and Yamarik, S., 2019. Do the intellectual property rights of regional trading
arrangements impact foreign direct investment? An empirical examination. International
Review of Economics & Finance, 62, pp.180-195.
Gravina, A.F. and Lanzafame, M., 2021. Finance, globalisation, technology and inequality: Do
nonlinearities matter?. Economic Modelling, 96, pp.96-110.
Hou, H. and Wu, H., 2019. What influence domestic and overseas developers’
decisions?. Journal of Property Investment & Finance.
Husni, H., 2020. Community-Based Education Financing in Islamic Education Institutions in
Indonesia. International Journal of Economics and Business Research, 4(1), pp.105-118.
Ji, Q. and Zhang, D., 2019. How much does financial development contribute to renewable
energy growth and upgrading of energy structure in China?. Energy Policy, 128,
pp.114-124.
Liobikienė, G. and Butkus, M., 2019. Scale, composition, and technique effects through which
the economic growth, foreign direct investment, urbanization, and trade affect
greenhouse gas emissions. Renewable Energy, 132, pp.1310-1322.
Mudaliar, A. and Dithrich, H., 2019. Sizing the impact investing market. Sizing the impact
investing market.
Petri, P.A., 2018. The interdependence of trade and investment in the Pacific. In Corporate links
and foreign direct investment in Asia and the Pacific (pp. 29-55). Routledge.
Rondinelli, D.A., 2017. Decentralization and development. In International development
governance (pp. 391-404). Routledge.
Steckel, J.C. and Jakob, M., 2018. The role of financing cost and de-risking strategies for clean
energy investment. International Economics, 155, pp.19-28.
Tian, P. and Lin, B., 2019. Impact of financing constraints on firm's environmental performance:
Evidence from China with survey data. Journal of Cleaner Production, 217, pp.432-439.
Zabludovsky, J., 2019. Trade liberalization and macroeconomic adjustment. In Mexico’s Search
for a New Development Strategy (pp. 173-206). Routledge.