Global Financial Market

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Introduction……………………………………………………………………………………P.2

Importance of stock market…………………………………………………………….P.2

Primary market...………………………………………………………………………….P.2-3

Resource allocation in the primary market….………………..P.3

Risk pricing in the primary market………………………………..P.3

Risk management in the primary market……………………P.3-4

Secondary market…………………………………………………………………………….P.4

Mobilize Savings in the secondary market…………………....P.4

Investment Opportunities in the secondary market………P.4

Stock market and economy (Statistical analysis)……………………………P.4-5

Conclusion……………………………………………………………………………………….P.5

Introduction
The global economy has experienced slow growth since the U.S. financial crisis of 2008-2009 and the European debt crisis, in which has exposed the unsustainable fiscal policies of countries in Europe and around the global market. The European debt crisis and U.S financial crisis are the key incidents affecting the world financial markets in the period of 2010-2012. With the market turmoil of 2008 and 2009 in fairly recent memory, investors were feared to take risk in the stock markets, as instabilities of global stock market accordingly enhanced. Stock market is a key element prior to reflect the performance of economy. It is an important part of the economy of a country. The stock market plays a pivotal role in the growth of the industry and commerce of the country that eventually affects the economy of the country to a great extent. That is reason that the government, industry and even the central banks of the country keep a close watch on the happenings of the stock market. The stock market is important from both the industry’s point of view as well as the investor’s point of view. Through this assignment, with particularly focusing on the performance of Hong Kong stock market, I am going to discuss the roles of the stock market that affect the economy by elaborating the functions of primary market and secondary market, and analysis the Hong Kong stock market in relation to the economy with statistics method.

Importance of Stock Market
The stock market is a necessary and essential aspect of commerce world-wide. Without a stock market, companies could not easily to raise the fund and capital, and investors could not quickly and easily trade shares through the stock market system, and the global economy would not be established into a maturity stage like now a day. The stock market and thus they play the most important role of supporting the growth of the industry and commerce in the country. That is the reason that a rising stock market is the sign of a developing industrial sector and a growing economy of the country.

Primary market
Whenever a company wants to raise funds for further expansion or settling up a new business venture, they have to either take a loan from a financial organization or they have to issue shares through the stock market. In fact, the stock market is the primary source for any company to raise funds for business expansions. If a company wants to raise some capital for the business it can issue shares of the company that is basically part ownership of the company rather than issuing debt for enhancing the capital and liquidity because of the cost efficiency. There are three main financial systems such as resources allocation, risk management and risk pricing to simultaneously and consistently perform in an economy under the philosophy of primary market.

Resources allocation in the primary market
Primary market can raise the fund for the company business plan in a short period. Economy can be affected according to any new IPO issued in the stock primary market. To issue shares for the investors to invest in the stocks, through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. There are certain rules and regulations for getting listed at a stock...
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