London Stock Exchange: Composition, Capacity, and Performance
The study aims to depict on how the work of financial markets are distributed within a domestic economy and international economy for investment and development purposes. The latter part of the report has chosen an emerging economy learn about the key challenges that it faced during the industrialization phase and trade policies implemented by the Government. Some of the main aspects of other subsections of the assignment has been discerned with the capital allocation within domestic economy and the capital allocation among international markets.
The main financial market composition of London has been deferred with “London stock exchange (LSE)”. As per the information in 2014, the total capitalization of LSE is depicted with market capitalization of US$6.06 trillion in short scale. This has made the stock exchange the third-largest largest in the world. The exchange was initially founded in the year 1801 with its premises in Paternoster Square close to St Paul’s Cathedral in the City of London. The stock exchanges are identified as one of the oldest in the world and can be traced back to more than 300 years. The different types of activities which are exercised by the stock exchange includes listing of depository receipts, offering different types of the services to raise capital and debt crisis management. The market is seen to regulate among 1300 large companies from 60 different countries. In the last 10 years, there has been a profit of more than 366 billion pounds. The ordinate of investment market is listed as a venture capital which are backed by some of the more established companies joining AIM seeking access to growth capital (Atkinson 2015).
The global financial system is identified as the worldwide framework for legal arguments, both formal and informal economic factors which has been seen to facilitate among international flows of financial capital for the purpose of investment and trade financing. Since the 19th century the modern conceptualization of economic globalization has been seen to witness for the evolution of the markets established fit for multilateral treaties, intergovernmental organizations aimed at improving the transparency of the regulation and effectiveness of the overall international markets (Martin et al. 2016).
As per the global financial development report 2017/2018, the countries have been seen to be open to international banking which has been seen to be having a significant amount of benefit from the global flows of the opportunities, funds and knowledge. However, there has been several regulatory challenges which are complex in nature. A series of the devaluations in the currency has been seen to be based on the several types of the factors for the foreign exchange market, which has been witnessed with the money market liquidity. It has been also discerned that after almost 10 years of globalization, the international banking system has suffered a setback from the financial crisis. There has been some important role for liberalization in terms of maximizing the benefits and minimizing the costs associated to international banking regime. It has been also discerned that the remaining opening is crucial to the countries in terms of considering the benefits associated to global flows of funds, opportunities and knowledge. There have been several studies conducted to know about market liquidity. Such reports have focused on particular regulation of the market which has impacted on the recent changes feature with the banks which are members of “Global Financial Markets Association” and “Institute of International Finance” (BBC 2016).
Global Financial System and Regulatory Challenges of International Banking
As per the information published in the article CityA.M., journal LSE has been regarded as the best by far via listed investment trust for tripling its earning in 2016. London stock exchange continues to maintain the same form in 2018 after appointment of the new chief executive preceding Xavier Rolet in an attempt to end the battle with activist investors. The value of the IPO in London was almost 3 times bigger than its next rival Borsa Italiana which is also owned by the LSE group. London has been further accounted for more than 30% of the funds raised across Europe. The largest single floating in 2017 in London was acknowledged with commodities conglomerate and Russian energy. Despite of the traditions in the investment, the companies has been seen with the driving force with real estate investment with the special purpose acquisition as per “Lucy Tarleton, capital markets director at PwC”. Based on her statements, the main pipeline for IPO operating in UK includes a number of international companies showing its continued attractiveness for cross-border image across Europe. In addition to this, “Ken Wotton, lead fund manager at Livingbridge Equity Funds” and an asset manager has given his statements that the acceleration in IPO and other corporate activity will be noticed during the first half of 2018 (Hill 2015).
In UK, the asset managers are seen to be responsible for managing the assets relating to insurance, long-term savings products and pension. The capital allocation system in UK is seen with over £5trn of assets under management which makes up a for a large part of capital markets. It has been further discerned that the asset manager has been all is able to generate a significant amount of the net exports amounting to £2.2trn which are managed by the overseas investors. As for the most of the academic and publicly debated forums, the asset management has many emphasized on the size of the industry in terms of gross value-added or number of employees and the performance relative to the market average (Comunian, Faggian and Jewell 2014). There has been little focus given on the role of asset management which has been seen with handling of new capital from both private and public companies. It has been also identified as the connection between the underlying services and investments which is provided to the clients for making the asset management industry more important to the intermediary (Daveiro and Vaughan 2016). The implication of this is seen with growing economy both in terms of savers and investors. Henceforth, there has been the need of understanding a better rule of the asset management for the primary markets. The main assessment of the contribution to the asset management services in UK is undertaken by “Investment Association (IA)” which is commissioned by “Oxera” to determine the contribution of the asset management services. With particular relevance to the activities of professional asset managers, the contribution has been efficient with the allocation of capital for pooling of savings on behalf of the investors and savers. This has been further supported by the qualitative and quantitative findings which has been able to explore the role of asset managers with the investment value and savings (Wrap 2015).
Asset Management Industry: Role in Economic Funding and Crisis Management
The role of the asset managers and funding of the UK economy consists of number of key messages about the economic funding and asset managers. A location is seen as the main function of asset management firms facilitating in UK company funding contributing to the long-term productivity and growth of the country (Ward and Rhodes 2014). This has been also discerned with the ability of multiple asset classes and the broad funding structures along with the supplies funded over the economic cycle. The asset managers are responsible for purchasing of the new corporate bond issued in UK with significant source of equity capital for IPOs at around 40% of the total issuance. The long-term holding periods is facilitated by potential for holding such as more than six years on an average for UK committees. This is seen to be longer than their own client’s investment in pooled funds which is held for more than five years on average (Ward and Rhodes 2014b).
Stewardship and role in crisis management is seen as another important activity with Delegation in the domestic economy. Several researches have been able to relate the cause that the increasing role of asset manager has added to the long-term relationship facilitating the supply of new finance. It has been also able to review that this in particular is seen with significant issuance of the shares in form of the rights issued. In 2009 in response to the financial crisis more than £80bn of rights fell short through shared placings which caused reduced leverage in terms of the challenging market conditions. Some of the other notable dimensions in capital allocation has been seen with shift in debt finance with total net bond issuance of £64bn from 2009 to 2013 and diversifying financing channel which has been evident with the private placements of the done by UK companies. This is discerned with growing significantly over five years to 2014 by £7bn (Tyler 2017).
As per the report published by Matteo Maggiori on international currencies and capital allocation it has been stated that the extent of global economic has increased dramatically over the last 40 years. Much is yet in the dark about billions of dollars of capital allocation done on daily basis in the global market. Using an oval security limited asset encompassing more than $ 27 trillion of global securities of portfolio it has been discerned that the structure of global portfolios is driven by both macro and micro economic levels. This is neglected at times with the currency of denomination of the assets. In general, if a bond is denominated in a currency of a particular country, then in that case the investors of the host country tends to own majority of the bond amount (Gibbs and O’Neill 2015). This has shown significant implication on the home buyers in bonds primarily reflected in-home currency bias and the foreigners mostly as financing the subset of domestic forms with the issuance of the bonds in foreign currency. It has been also inferred that dollar and euro value are exceptions to this particular pattern with companies based in United States and Euro zone are uniquely able to please the local currency bonds in portfolios based in foreign markets. The study has been finally able to uncover the pervasive and large shift in the use of international currencies which started from 2008 global financial crisis. The cross-border holdings of the portfolios, which have starkly shifted of from Euro denominated bond toward a more dollar-denominated bond (Kirby et al. 2017).
The study has also discerned that the gross cross-border capital flows have shown a substantial increase in the recent decade. Government and companies in developed and developing countries has depicted increasing trend international investors for financing. However, it is much easier to be discerned for trillions of dollars’ worth for cross-border portfolios especially in markets with fixed incomes. The use of noble secure delivered have suggested that the structure of global portfolio at both micro and macro level is neglected in the aspect of currency denomination of the assets (Denis and Kannan 2013). This leads to significant issues associated to capital allocation in the international market. International currencies such as dollar and euro constitute exception to these patterns. In the US and Euro zone the currency bonds are allocated similarly across borrowers (Bahree 2013). This shows that the international currencies do not appear to go through the same concern of foreign flows which distorts the allocation of capital in the domestic firms. For instance, the US firms issue local currency bonds and appeared to be able to access foreign lenders and domestic lenders who are compatible with the trading activities. This constitute a previously neglected advantage from having a global currency (Stokes et al. 2014).
Myanmar is depicted as an emerging economy with nominal GDP of $ 66.34 billion in 2016 and having an overall purchasing power of adjusted GDP of $ 340 billion in the same year. The economic liberalization took place in 2011 with the new presidency of Thein Sein’s government. The main policy regimes included currency exchange rate, anticorruption, taxation and regulation of foreign investment laws. It was further discerned that the foreign investments increased from USD 300 million in 2009 to 2010 dual USD 20 billion in 2012-2015 (BBC 2016).
The substantial amount of increase was witnessed by a large inflow of capital which resulted from a strong Burmese currency Kyat. This alone resulted in an increase in economy by 25%. In addition to this, the Burmese government imposed several relaxations on the restrictions for abolished export taxes. Despite of the significant problems of currency the economy of Myanmar is expected to grow by more than 8.8% in 2011. Post completion of seaport in Dawei in Burma worth 58 billion dollars, the economy of the country is expected to be the main trading hub connecting South China Sea and Southeast Asia via in Andaman to the Indian Ocean, thereby receiving goods from countries such as Africa, Middle East and Europe. This has been identified with spurring growth among the ASEAN region (Meehan 2015). In March 2012, the draft associated to foreign investment law emerged more two decades ago formalized overseas unprecedented liberalization of the economy. Due to this, the foreigners are no longer required to partner with the local individuals to start a business set up in the country and be able to legally take a land far leasing (Odaka 2015).
The law as per the draft has been further able to stipulate that the citizens of Burma need to constitute a minimum of 25% of the skilled workforce of the firm and subsequent training which is summing up to more than 50 to 75%. In addition to this, on 28th of January 2013, the government of Myanmar announced several drafts on international lenders for cancelling their refinance, which is close to $ 6 Billion of the debt amount constituting of almost 60% owned by foreign lenders. The inward foreign direct investments of Myanmar have been depicted with steady increase since this reform was implemented. Moreover, the country was approved with USD 4.4 billion worth of investment projects between January and November 2014 (Mizuno 2015).
Despite of the emerging economy of Myanmar, there has been several unresolved internal problems in the economy due to trade policies and internationalization undertaken by the government. The first ever countrywide study of the government of Myanmar depicted that more than 37% of the nation’s population were unemployed and on and average of 26% of the population lived in poverty. As per the current state of the economy of Burma, the significant impacts of demographics of economic hardships has resulted in extreme delays in family building and marriage. The average age of marriage among men is discerned with 27.5 and woman as 26.4, which is almost unparalleled to the regions with the exception of developed countries such as Singapore (Asian Development Bank 2015).
In 2012, the foreign investment law draft included a proposal for the transformation of Myanmar investment commission which is government by appointed body with consideration of independent board. This was proposed to bring a greater transparency on the issuing of investment licenses and reforms which was drafted by senior officials and experts. However, this draft is still a question on whether corruption of the government can be addressed succinctly. Several regions including Golden Triangle remain off-limits to the foreigners and in various parts of Myanmar, the government is seen to be still at war with various ethnic groups (Kudo, Kumagai and Umezaki 2014).
Conclusion
The main depiction on the financial market has been able to reveal that global financial system is identified as the worldwide framework for legal arguments, both formal and informal economic factors which has been seen to facilitate among international flows of financial capital for the purpose of investment and trade financing. As per the global financial development report 2017/2018, the countries have been seen to be open to international banking which has been seen to be having a significant amount of benefit from the global flows of the opportunities, funds and knowledge.
The main assessment of the contribution to the asset management services in UK is undertaken by “Investment Association (IA)” which is commissioned by “Oxera” to determine the contribution of the asset management services. Myanmar is depicted as an emerging economy with nominal GDP of $ 66.34 billion in 2016 and having an overall purchasing power of adjusted GDP of $ 340 billion in the same year. The economic liberalization took place in 2011 with the new presidency of Thein Sein’s government. The main policy regimes included currency exchange rate, anticorruption, taxation and regulation of foreign investment laws. The inward foreign direct investments of Myanmar have been depicted with steady increase since reform related to international lenders for cancelling their refinance was implemented. The study has also evaluated the significant downturn in the economy due to Government regimes. The first ever countrywide study of the government of Myanmar depicted that more than 37% of the nation’s population were unemployed and on and average of 26% of the population lived in poverty. In 2012, the foreign investment law draft included a proposal for the transformation of Myanmar investment commission which is government by appointed body with consideration of independent board. This was proposed to bring a greater transparency on the issuing of investment licenses and reforms which was drafted by senior officials and experts. However, this draft is still a question on whether corruption of the government can be addressed appropriately.
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