This project is about the comparison. This project also helps to understand which market is best the equity or the debt market by correlating the debt and equity. The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.
This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered. Any subsequent trading takes place in the secondary market. The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.
The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance. This market can be split into two main sectors: the primary and secondary market. The primary market is where new issues are first offered. Any subsequent trading takes place in the secondary market.
A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock(shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value.
Moreover, the vast majority of derivatives ‘cancel’ each other out (i. e. , a derivative ‘bet’ on an event occurring is offset by a comparable derivative ‘bet’ on the event not occurring). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together.
The largest stock market in the United States, by market capitalization, is the New York Stock Exchange (NYSE). In Canada, the largest stock market is the Toronto Stock Exchange. Major European examples of stock exchanges include the Exchange, London, Paris Bourse, and the Deutsche Borse (Frankfurt Stock Exchange). In Africa, examples include Nigerian Stock Exchange, JSE Limited, etc. Asian examples include the Singapore Exchange, the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange.
In Latin America, there are such exchanges as the BM&F Bo Vespa and the BMV. Market participants include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares. Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors.
The state of the current world environment is causing a more conservative investment attitude, which was clearly a plus for developed markets last month as investors turned defensive and digested strong corporate earnings, some signs of recovering activity. Strong export demand from Asia and the United sates also helped boost manufacturing and hiring in number of developed countries. In addition, as fuel and food prices surged and threatened to undermine growth, inflationary concerns and uncertainty about the global economic outlook continued, boosting gold prices and hurting the US dollar.
The impact of rising fuel and food price has helped send core US inflation to a good level for US equities (the Federal Reserve said that in wont raise rate anytime soon), while inflation in some large emerging markets remained well above central bank target levels and in other developed market was somewhat subdued. Some investors feared that near-term rate increases from central banks around the world including in Europe, china and Brazil, as well as more increase expected later this year, could hurt corporate profit growth.
German equities switched gears again and rallied in April, rising about 11% in US dollars and outperforming the broader global market. Stronger-than-expected corporate earnings and a number of positive economic reports helped boost shares. In economic news, German unemployment fell below 3 million for the first time in almost 19 years (in adjusted term) in April as German companies hired to meet strong export demand, and German factory orders increased by 2. 4% month-over-month in February, surprising economist who predicted a 0. 5% increase.
Positive sentiment outweighed higher oil prices, continuing European sovereign debt problem and weaker-than- expected April investor confidence data. In April, the euro appreciated about 4. 4% versus the US dollar. Looking ahead, we maintain a positive outlook for Germany, which looks like a bargain compared to historical prices and prices in other developed markets. United Kingdom: Equities in the Kingdom reversed course again in April, rising 7% in US dollars and outperforming the broader market, as investors focused on signs of a recovering economy.
UK consumer confidence roe in March from a record low in February amid more optimism about the outlook for the economy. In other economic news, UK GDP grew 0. 5% quarter-over quarter, matching the median forecast and erasing the concentration of the previous three months. Services, which expanded 0. 9%, led the return to growth. Still, UK manufacturing unexpectedly stalled in February. As inflation slowed to 4% in March from 4. 4% in the previous month, the Bank of England’s target and outpacing wage growth, spurring an economic recovery took priority for the bank over the threat of rising prices.
In April, the pound appreciated 3. 9% versus the US dollar. Looking ahead, our outlook for the United Kingdom remains neutral. Switzerland Swiss equities reversed course again in April and rallied, finishing up 9. 5% in US dollars and outperforming the broader global market. Strong earnings, including from Swiss lender UBS, and merger and acquisition news helped boost shares as did signs the Swiss economy is recovering, thanks to low unemployment and strong export demand.
In local economic news, Swiss export rose in the first quarter on demand from Asia and the United States and unemployment in March hit the lowest level in nearly two years as companies hired to meet the global demand. The indicator, which gauges the economists who had expected a decline and suggesting the economy, is recovering. Swiss inflation accelerated more than economists forecasted in March to the fastest pace in almost a year, and April, the Swiss franc appreciated nearly 5. 1% versus the US dollars.
The Swiss market, which is made up of many defensive plays such as pharmaceuticals, may also have benefited from investor uncertainty and belief that the market was undervalued. We hold a neutral view of Switzerland. CANADA The Canadian market rose slightly in April, finishing up nearly 1. 2% in US dollars and underperforming the broader global market. Canada’s economy unexpectedly shrank in February following four months of expansion, as production dropped at factories and wholesalers. GDP output fell 0. % versus economist’s expectation of change.
Canada’s annual inflation rate also accelerated in March to 3. 3%, the fastest pace in 2-years and exceeding all forecasts, which added pressure on the bank of Canada to raise rates. Earlier in the month, the bank had left its target interest rate unchanged at 1%, saying a strong currency was bigger concern than inflationary pressures. The Canadian dollar appreciated nearly 2. 5% versus the US dollar in April. Looking forward, we hold a neutral outlook of Canada.
We like emerging markets longer terms, with inflationary concern taking center stage in April, we prefer developed to emerging market in the short term. BRAZIL Brazilian equities underperformed the broader global market in April, finishing down nearly 0. 7% in US dollars. Investors in Brazil shrugged off rising commodity prices and upbeat earnings as inflationary concern continued to weigh on shares. Brazil’s central bank slowed down its pace of rate increases, raising its selic rate by 25 bps to 12%, because of uncertainty over the global recovery and the local slowdown.
The move surprised analysts who had expected the bank to maintain the 50 bps pace of the previous two meetings and signaled that the bank may keep rising borrowing costs for a longer period of time than previously expected to guarantee inflation returns to it 4. 5% target in 2012. Brazil’s inflation rate rose to the highest level since November 2008- with consumer prices up 6. 44% in the years through mid April –as food and fuel prices surged. A record volume of imports in March also helped inflation to accelerate and the Brazilian real to appreciate 3. % against the US dollar.
While we believe there is much to encourage favor for Brazilian equities long term, including excellent demographic, reasonable valuation, and strong independent central bank, we have decided to avoid a formal overweight view due to short-term inflation concerns. We would prefer to see either an actual drop in inflation from the current level or a drop in valuations relative to world markets before favoring an overweight to Brazilian stocks. For now, we remain neutral and wait for a better entry point. Russia
Russian equities finished nearly flat in April as measured in US dollars, underperforming the broader market. While higher oil prices continued to help the country’s energy sector, inflationary concern weighed on shares. With inflation above the central bank’s target since October, thanks to rising fuel and food prices, the bank unexpectedly increased its benchmark rate 25 bps to 8. 25%, the second increases this year as the bank tries to quell inflation. The Russian economy grew 4% last year, beating economists’ forecasts, after a 7. 8% contraction in 2009, and is forecast to expand 4. 2% this year.
Amid the inflationary concerns, the ruble appreciated 3. 7% versus the US dollar. Still, we maintain a positive tactical outlook for Russia relative to other emerging markets. Russia is a natural beneficiary of the spike n crude prices and appears to be the one emerging market that is significantly undervalued. Still, a lack of corporate governance and transparency prevents us from recommending Russia over the long term. Portugal Agreed in early May to a 78 billion euro bailout by the European Union and the international monetary fund, the third euro zone country to do after Greece and Ireland.
In Finland, the euro-skeptic True Finns party won 19% of the votes in the national election. The party opposes additional funding to the European Financial stability Facility, which is backed by the six AAA- rated euro zone countries. Currently, it looks like Portugal’s bailout will get parliamentary approval in Finland. The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion.
As of March 2009, the market capitalization was around $598. 3 billion (Rs 30. 13 lakh crore) which is one-tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009. A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as an organization, association or body of individuals established for regulating, and controlling of securities. The Indian equity market depends on three factors – * Funding into equity from all over the world * Corporate houses performance * Monsoons
The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices – Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). The market also includes the debt market which is controlled by wholesale dealers, primary dealers and banks. The equity indexes are allied to countries beyond the border as common calamities affect markets. E. g. Indian and Bangladesh stock markets are affected by monsoons. The equity market is also affected through trade integration policy.
The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term investors, short-term swing and position traders and very intra day traders. The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India).
History of Indian Equity Market The history of the Indian equity market goes back to the 18th century when securities of the East India Company were traded. Till the end of the 19th century, the trading of securities was unorganized and the main trading centers were Kolkata Mumbai. The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.
Most trading in the bond market occurs over-the-counter, through organized electronic trading networks, and is composed of the primary market (through which debt securities are issued and sold by borrowers to lenders) and the secondary market (through which investors buy and sell previously issued debt securities amongst themselves). Although the stock market often commands more media attention, the bond market is actually many times bigger and is vital to the ongoing operation of the public and private sector.
The bond market (also known as the credit, or fixed income market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the Secondary market, usually in the form of bonds. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures.
financial statement discussion
Continuing in Chapter 2 on balance sheets and income and expense statements, it is now time to prepare your own basic Income And Expense Statement. If you’re doing this for the first time, as you have already discovered, it may not be as easy as it sounds! Use the following questions to help you along as well as Worksheet 2.2 in your textbook:
Have you included all items of income on your income and expense statement? (Remember, your paycheck is income)
Have you included all debt payments as expenses on your income and expense statement? (Your phone bill is an expense for this month if you’ve already paid it)
Are there occasional expenses that you’ve forgotten about, or hidden expenses such as entertainment that you have overlooked? Look back through your checkbook, spending diary, or any other financial records to find these occasional or infrequent expenses.
Remember: Items go on either the balance sheet or the income and expense statement, but not on both. For example, the $350 car payment you made this month is an expense on your income and expense statement. The remaining $15,000 balance on your car loan is a liability on your balance sheet, while the fair market value of your car at $17,500 is an asset.
After completing your Income And Expense Statement, subtract your total expenses from your total income to get the cash surplus (a positive number) or deficit (a negative number). Now, make sure this surplus or deficit is located at the bottom of your statement in order to display your financial condition.
For the purposes of discussion, please keep your personal financial numbers private.
Do you like where you are? If not, how can you get where you want to be? Use your financial statement to help you formulate plans for the future. Let’s Discuss.
Using your results, share a 150 word reply discussing the following:
Specifically why you like (or don’t like) where you are
What you definitively need to do to get where you want to be.