International Capital Market

>> May 7, 2010


International capital market is that financial market or world financial center where shares, bonds, debentures, currencies, hedge funds, mutual funds and other long term securities are purchased and sold. International capital market is the group of different country's capital market. They associate with each other with Internet. They provide the place to international companies and investors to deal in shares and bonds of different countries.

After invention of computer and Internet and revolution of financial market in 2010, almost all financial markets are converted in international capital markets. We can give the example of Hong Kong, Singapore and New York world trade centre. International capital market was started with dealing of foreign exchange. After globalization of financial sector, companies have to take certificate for dealing in international market. Suppose, Indian company wants to sell shares in France, for this, Indian company should take certificate named global depository receipt (GDR).

International capital market's daily turnover has crossed $ 5 trillion. International capital market is very helpful for reducing the risk of small company because in international market, you can buy different countries companies shares, debentures and mutual funds. Different countries have different business environment, so if any country is facing loss and due to financial crisis, your investment in that country may suffer losses but you can fulfill this loss from other country's investment. So, overall risk will be reduced by this technique.

Suppose, a company wants to invest his money, then it is good option, that A company must invest it in international market. He can invest with following way and make his best portfolio:

a) A company can buy 10000 shares of USA Company.

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b) A company can buy 10000 shares of Indian company.

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c) A company can buy 10000 bonds of UK Company.

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d) A company can also invest in the mutual funds of Pakistan or USA or Canada.





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