What are the recent developments in global financial markets...?

Introduction
Financial transactions are costly. On the one hand, processing a transaction requires

resources, on the other hand the regulatory framework is costly as well. In both areas

there have been dramatic changes recently. Computerization and advances in

telecommunications lead to considerably lower technical costs. Furthermore,

deregulation has eliminated many barriers to trade. Financial markets have become

and still are in the process of becoming more open, and one often hears of the

globalisation of financial markets”. International transactions which lead to a net

debtor position of countries result in an additional type of transaction cost: country

risk. Unlike domestic borrowers, sovereign countries cannot be forced to perform

their contracts by legal action against them. Instead, creditors have to rely on indirect

mechanisms.
Global Financial Market

Recent developments in global financial markets

Global financial markets witnessed turbulent crisis in the US sub-prime mortgage

market deepened and spilled over to markets for other assets. Concerns about

slowdown in the real economy propelled a broad-based re-pricing of growth risk by

the end of the year.

Multi-national organizations hire the experts in international financial management

to study the inter-play between the various elements of international finance and

accordingly formulate strategies for international business for their organization. It

is also referred to as multinational finance, international monetary economics or

international macroeconomics.

International trade and related financial activities provide both opportunities and

associated risks for investors, exporters and capitalists. By understanding the

emerging trends in this field, they can learn how to invest fruitfully in today’s

environment. The field of international finance has seen a significant growth over

the past decade.

Some of the Recent developments in global financial markets;

1. Countries are Re-balancing Their Import Export Trade

This trend is visible in the way countries like China are trying to balance their import

and export trade. The country’s fast growth in the last decade was fueled by its major

dependence on its import and export trade. The country is known for large amounts

of export of inexpensive goods all over the globe. This happened at a large scale

which was not sustainable. Now China is importing goods in exchange for

investment. It is now focusing on producing everything they need for domestic use.

This puts the countries that relied on Chinese investment in a spot as they struggle to

find comparable markets for their products.

2. There is New Found Cooperation Among Countries

There is a growing need for cooperation in trade among many countries. Countries

are getting involved in treaties and international organizations in a way that is

mutually beneficial to all the member countries. For example, the significant growth

of data economy has led to businesses realizing the need of cross border data transfer.

Hence, large scale multi-national corporations have eased up on their data transfer

related restrictions. This helps the organizations to share online resources for trading,

export and for collecting relevant data from around the world.

3. There Exists Growth in Export Opportunities in India and South America

India and many countries in South America such as Brazil, Chile, El Salvador and
Peru have been expanding their economic opportunities. India is growing market for
US exporters. It purchases precious metals and diamonds, machinery, optical
equipment and agricultural products from the USA. Brazil imports aircraft,
machinery, petroleum products and electronics from the USA. These countries have
a strong and growing economy as well as an ever-expanding middle-class segment
who is eager to purchase premium merchandise.

4. There is a Rising Popularity of Euro Markets

Euro market is a financial market that deals with euro-currencies. It consists of banks

outside the country from where the currencies originate. Euro banks are a popular
choice for many multinational corporations for their financial plans because they are

free from any regulation and they have the ability to expand a stock of money and

credit outside the control of national authorities.

5. There is a Visible Emergence of Multi-National Corporations from

Emerging Economies

In 2006, it was observed that out of the 100 big multi-national corporations of the
world, 22 of them came from emerging economies. This figure has been on an
increase and big multinational corporations from the developing or transitional
economies are playing a significant role in world economics.

6. There is an Increase in Cross Border Mergers and Acquisition Based

Activities

Due to the rise in the level of foreign direct investment (FDI), there has been a spike

in mergers and acquisitions (M&A) within the financial domain across the globe. The

acquisition of ABN-AMRO by the consortium of Royal Bank of Scotland, Fortis and

Santander was one of the largest deals in the history of banking industry.

7. There is a Deregulation of the Financial Markets

The world is witnessing an internationalization of money and the capital markets.

Countries like the USA and many European countries offer free financial markets to

investors. Singapore and Hongkong have also emerged as strong financial markets.

This has led to the creation of a worldwide banking structure.

Conclusion

As organizations are going global, there is an increased interest in international

finance for investors and global business owners. And, they can make the most of

their presence in the international finance market by being aware of the latest trends

in this field.