The Global Capital Market

ATTRACTIONS OF THE GLOBAL CAPITAL MARKET (thu hút của thị trường vốn toàn cầu)
A global capital market benefits both borrowers (người vay) and investors:
+ It benefits borrowers by increasing the supply of funds available for borrowing and by
lowering the cost of capital: with a larger pool of investors, it provides a larger supply of
funds for borrowers to draw on. ( tăng cung vốn và giảm giá vốn)
+ It benefits investors by providing a wider range of investment opportunities, thereby
allowing them to build portfolios of international investments that diversify their risks
( cung cấp cơ hội và đa dạng rủi ro)

GROWTH OF THE GLOBAL CAPITAL MARKET (tăng trưởng)

The global capital market is growing at a rapid pace. There seem to be two factors driving this
growth:
+ Information Technology: Financial services is an information-intensive industry. It uses
this information to make decisions about what to invest where, how much to charge
borrowers, how much interest to pay to depositors, and the value and riskiness of a
range of financial assets
+ Deregulation (bãi bỏ quy định): Increasing acceptance of the free market ideology
associated with an individualistic political philosophy also has a lot to do with the global
trend toward the deregulation of financial markets, and the dismantle of capital controls,
loosening both restrictions on inward and outward investment

GLOBAL CAPITAL MARKET RISKS (rủi ro thị trg vốn toàn cầu)
+Individual nations are becoming more vulnerable (tổn thương) to speculative capital flows, and
this is having a destabilizing effect on national economies.
+Despite advances in information technology, it is still difficult for investors to get access to the
same quantity and quality of information about foreign investment opportunities that they can
get about domestic investment opportunities.

Market type Benefits Risks

Eurocurrency Lack of government regulation Greater possibility of bank failure

> higher interest rate on bank Foreign exchange risk
deposits and lower loans

Global bond Less regulatory interference

Regulatory interference
Favorable tax status

Global equity Attract capital from international

investors
 Stock listing on multiple exchanges
Raise funds by issuing equity or
debt

When borrowing funds (vay vốn) from the global capital market, companies must weigh (cân
nhắc) the benefits of a lower interest rate against the risks of greater real costs of capital due to
adverse exchange rate movements.

Investors
- firms
- individual
- non bank financial institutions (tổ chức tài chính mà k phải là ngân hàng)
Ex: pension funds (quỹ lương hưu), insurance company

Type of loans
+ Equity loans (cho vay vốn chủ sỡ hữu) (company sell stock)
Raise $ (gây quỹ)-> buy plants and equipment, pay wager ( trả tiền cược)
Divident& gains in stock $
Chosen: no payment needed

+ Debt loan/ cash loan& funds raised from sale of corporate bonds
Trả tiền theo kì (gốc+lãi)
Investor sẽ nhân được 1 số tiền cố định trong 1 khoảng thời gian
Chosen: no give up owenership (quyền sỡ hữu)

Why so attractive
Borrower benefit: lower $ of capital (global martket > local) -> bigger pool ->low cost (chi phí
thấp)
Investors benefit: porfolio diver sification
Wide range of investment choices -> diversify porfolio: giảm risks