International Trade Finance & Investment

International Trade
Finance And Investments

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Background of financial markets:................................................................................................4
Capital Allocation within Domestic Economy:...........................................................................5
Capital Allocation within International Markets:........................................................................6
TASK 2............................................................................................................................................7
Evaluation of Japan economy related to financial trading:..........................................................7
Critical evaluation of challenges in relation to Industrialisation and trade policies:...................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Trade finance is related to domestic and international trade transactions. It is about fund
allocation in domestic and other countries for the business purpose and investment purpose. In
trade finance it is necessary for buyer and seller being there. Trade international finance and
investment is related to exporting and importing goods and services for the funding purpose. In
this process banks and finance market provides supports to economy for transactions. Apart from
investing in business it also includes documentary collection, trade credit purchase, finetrading,
supply chain finance, forfeiting and factoring. The country which is selected for this trade
finance and investment report is UK. It is the biggest economy in the world which trade in
international markets (Ahn, 2020). This report covers topics such as financial markets, capital
allocation within domestic economy, capital allocation within international markets. Apart from
this it also covers topics such as evaluation of an economy and challenges faced by it due to
industrialisation and trade policies.
TASK 1
Background of financial markets:
Financial markets refers to market where trading of securities runs which includes stock
market, bond, forex, derivatives market etc. it plays vital role in healthy capitalist economies.
This market provides source to people invest in international market and generate funds for
business. Through this businesses can generate funds for their business activities in order to
expand their business, this will helps its to create brand image (Antras and Foley, 2015). This is
the market where people comes together for issuing securities. Investment in foreign market
allows firm to know people about their business and achieving high profitability than others. It is
easy to get money fro m financial markets, it helps in investment in the market and get higher
returns on capital. In financial market instruments includes shares, bonds, debentures, shares.
There are various financial markets:
 Bond market: Financial market is the place where investors give money as a bond
security for the predefined interest rate till the maturity period. Bond its the type of
agreement which is used in issuing money to the buyers for security purpose (Auboin and
DiCaprio, 2017).

 Money market: Money market trading as high liquidity with short maturity. In th9is
market securities are leading as less than one year and short term period. Money market
deals in currencies and money instruments (Bonfiglioli, Crinò and Gancia, 2019). It
includes mutual funds buy by individuals and money market accounts opened by
customers of banks. It includes various financial institutions and dealers who are seeking
to borrow securities.
 Forex market: The forex market is the market in which buyers and sellers exchange the
currencies of different countries. It includes institutions such as central banks, investment
management funds, hedge funds, retail brokers and investors.
In context to UK economy, it is the largest markets across the world for fund
management with US and japan. UK assets has total record of $ 11.8trn in 2017 and the strong
sector which is involves in it is international orientation. UK plays vital role in specialists areas
in financial services. It is the most innovative, sophisticated and dynamic country centred in
finance. In context to UK, over 50000 employees are there in finance sectors and its supporting
services (Coşar and Demir, 2016). Its fund management sector contributed 0.8% of its GDP in
year 2007. apart from this it is one of the major centres in investment in private wealth. It has
large financial market, large number of companies are attach with it. It has the second largest
deposits in the world after the US economy (Financial markets, 2020). It covers around 20% of
the global total and its banks traditionally gives higher rate of return on its capital rather than
other advance economies. It also has vital role in private and investment banking. It has home of
more foreign banks rather than other largest economy. London has branches and subsidiaries of
254 foreign banks which is almost double of New york.
Capital Allocation within Domestic Economy:
Domestic means own country, products are produced in own country and policies and rules
related to own country. Self economy is known as domestic country. For example this report is
based on UK economy. For UK, itself UK is domestic country in which it applies self rules and
policies in its financial market. Nominal gross domestic product for the country is 2.638 trillion
in terms of US dollar in year 2020. PPP gross domestic product is 2.978 trillion, it also in dollars
for the same year 2020. Country incorporated exports for the 837 billion in terms of US dollar in
2019 and its imports shows as amount of 876.6 billion US dollar in 2018 (Capital allocation in
domestic markets, 2020). The company trading under its own economy is known as domestic