instruments of emerging market

8/10/2019 Instruments of Emerging Market

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Emerging Market& Instruments In Emerging

Market

Made bySandhiYA

and Hem



Introduction

The term “Emerging Markets” appeared in the beginning of the1980’s and was initially used to designate finan ial marketslo ation in de!eloping ountries a ording to world bank"

Emerging markets are sought by in!estors for the prospe t of highreturns# as they often e$perien e faster e onomi growth asmeasured by %&'" (n!estments in emerging markets ome with

mu h greater risk due to politi al instability# domestiinfrastru ture problems# urren y !olatility and limited e)uityopportunities *many large ompanies may still be +state,run+ or

pri!ate-" .lso# lo al sto k e$ hanges may not offer li)uid marketsfor outside in!estors"



Instruments In Emerging Market

/ 2(3% .4E T5E (36T47ME3T6 (3 EME4%(3% M.4 ET6• .ME4( .3 &E' 6(T 4: 4E E('T6 *.&46-• % ;. &E' 6(T 4: 4E E('T6 *%&46-• / 4E(%3 744E3 : 3<E4T(; E ; &6• / 4E(%3 ; 3&6•

% ;. M7T7. /73&6



AMERICAN DEPOSITORY RECEIPT (ADR)

(t is a negotiable se urity representing se urities of a non,

76 ompany trading in the 76 finan ial markets(t is denominated in 76 dollars and may be traded likeregular shares of sto k

6e urities of a foreign ompany that are represented by an.&4 are alled American depositor S!ares *ADSs -

(3/ 6:6 Te hnologies td was the "irst Indiancompan to issue .&4s



#$O%A$ DEPOSITORY RECEIPT (#DR)

(t is issued by one ountry’s bank as negotiable ertifi ate

and is traded on the sto k e$ hange of another ountryagainst a ertain number of shares held in its ustody"

3ormally 1 %&4 = 10 shares# but not always"

(t is denominated in some freely on!ertible urren y"

%&4s are often listed in $u&em'ourg # $ondon #rank"urt #Singapore and Du'ai Stock E&c!ange

4elian e (ndustries was the "irst Indian compan toissue %&4s"



OREI#N C*RRENCY CON+ERTI%$E %ONDS ( CC%)

They are debt instruments issued in a urren y

different than the issuer’s domesti urren y with anoption to on!ert them in ommon shares of the issuerompany

The interest on / ;s is generally >0? ,@0? lessthan on normal debt paper or foreign urren y loans

Maturity period of / ; is A years but there is norestri tion on time period for on!erting / ; intoshares



oreign %ond

. bond that is issued in domesti market by a foreignentity# in the domesti market’s urren y" . foreign bond isthe most often issued by a foreign firm to raise apital in adomesti market that would be more interested in

pur hasing the firm’s debts"

/or foreign firms doing a large amount of business in the

domesti market# issuing foreign bonds is a ommon pra ti e" Types of foreign bonds in lude ;ulldog bonds*;ritish apital market-# Matilda bonds*.ustralianapital market- and 6amurai bonds*Bapanese apitalmarket-"



#,o'a, Mutua, unds

. type of mutual fund# losed,end fund or e$ hange,traded fund that ain!est in ompanies lo ated anywhere in the world# in luding the in!estoown ountry" These funds pro!ide more global opportunities di!ersifi ation and a t as a hedge against inflation and urren y risks"

Bust as buying shares in a domesti e)uity mutual fund is similar to buydomesti sto ks# buying shares in global and international mutual fund

similar to buying shares in the foreign sto ks"The big benefit of buying foreign sto ks through a fund is that the glomutual funds not only spreads money among numerous sto ks# they an spread money among numerous ountries"

instruments of emerging market

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