國際金融英文版CH7

Chapter7InternationalFinancialMarketsFinancialMarketsFinancialmarketsarefortransactionsoffinancialassetsorliabilities.Theyprovidefinancingandinvestingforindividuals,firmsandgovernments.Liquidityisthemostimportantfeatureofthefinancialmarket.Liquidityistheeasewithwhichinvestorscancaptureanasset’scashvalue.InternationalMoneyMarketMoneymarketisthemarketforfinancialassetsandliabilitiesofshortmaturity(lessthanoneyear).Thefeaturesofmoneymarketarehighdegreeofliquidity,lowreturnandlowdegreeofrisk.Short-termcreditmarketisaninterbankmarket.Itprovidesshort-termloanswithmaturitiesoflessthan1year.Newspaperspublishtheinterestrateofthismarketonadailybasis.Short-termsecuritiesmarketincludesthefollowingsecurities:Treasurybill:ashort-termU.S.governmentsecurity.Itbearsnoformalinterestandisissuedatadiscountonitsredemptionprice.T-billsareusually3,6monthsandoneyear.TheparvalueoftheT-billsare$1,000andinmultiplesof$1,000.T-billsareregardedasahighlyliquidfinancialassetbybanksandotherfinancialinstitutions.Internationalmoneymarketinterestratequotations:July29,2011Short-term7-daysnoticeOnemonthThreemonthSixmonthOneyearEuro1.00-0.901.08-0.981.54-1.341.72-1.52-2.02-1.672.00-1.70DKrone1.50-1.301.40-1.201.51-1.251.72-1.221.85-1.352.15-1.96Sterling0.57-0.470.64-0.540.84-0.641.02-0.821.30-1.101.76-1.56SwissFranc0.18-0.030.33-0.060.30-0.170.28-0.180.47-0.350.81-0.69CDollar1.15-0.851.15-0.871.17-0.901.33-1.181.88-1.352.05-1.70U.S.Dollar0.29-0.140.41-0.110.40-0.200.60-0.400.92-0.821.30-1.20JYen0.10-0.050.11-0.060.05-0.040.35-0.250.46-0.260.79-0.67Sdollar0.02-0.010.31-0.060.28-0.030.33-0.100.40-0.190.66-0.37Commercialpaper:anunsecured,short-termdebtissuedbyafirm.Theminimumdenominationisusually$100,000or$1million.Maturitiesarebetween20to45days.Mostinvestorsholdthecommercialpaperuntilmaturity.Negotiablecertificateofdeposit(NCD):Itisissuedbycommercialbankswithaminimumfacevalueof$100,000.Itcanbesoldinthesecondarymarket.Repurchaseagreementorrepo:TheholderofT-billssellstheT-billstoalenderandagreestorepurchasethematanagreedfutureprice.T-billsareusedascollateral.ThelenderhasclaimtotheT-billsiftheborrowerdefaultsontheloan.Soreposhavenodefaultrisk.Reverserepoisthecompleteoppositeofarepo.ThedealerofT-billsbuysT-billsfromacustomerandsellshimlateratahigherprice.Termrepoisexactlythesameasarepoexceptthetermoftheloanismorethan30days.Banker’sacceptanceisashort-termdraftdrawnbyanon-financialfirm(importer)andguaranteedbyabank.Abankusuallystamps“ACCEPTED”onthedraft.Theholdercansellitatdiscountinthesecondarymarket.Discountmarkettradesdifferentdrafts.InEngland,themarketconsistsofbanks,discounthousesandbillbrokers.EurocurrencyMarketsEurocurrencymarketisfortransactionsoffinancialassetsandliabilitiesdenominatedinEurocurrencies.Eurocurrencyisacurrencyheldinacountryotherthanthecountrythecurrencyisissued.Forexample,adollardepositinaLondonbankoraParisbank.ThedollariscalledEurodollar.IfasterlingdepositheldinaJapanesebank,thesterlingiscalledEurosterling.Eurocurrencymarketisaninternationalmoneymarketbecausethematuritiesofvarioussecuritiesonthismarketarelessthanoneyear.Theparticipantsinthismarketarefinancialinstitutions,MNCs,governmentsandinternationalinstitutions.ThefirstEurodollardepositswereinLondonandParisbanksduringthe1950s.FormerSovietUnionswereafraidofU.S.freezingtheirfundsintheU.S.banks.TheythereforetransferredthefundsfromU.S.bankstoU.K.andFrance.ThesedollardepositswerethefirstEurodollars.Whydoesthemarketgrowsorapidly?ThecausescontributetothedevelopmentofEurodollarmarketincludetheincreasedregulationonbankingindustryin1960sandoilcrisisin1970s.RegulationQimposeda5.25%ceilingontheinterestratethedomesticbankscouldpay.Interestequalizationtax(IET)requiredtaxesonU.S.residents’earningsonforeignsecurities.Voluntaryforeigncreditrestraintguidelineswererestrictionsplacedonnon-domesticusesofdomesticallygeneratedfunds.In1970’s,OPECcountriespouredhugeamountsofoilincomeintotheEurodollarmarkets.OilimportingcountriesneededfundstofinancetheirhugeBOPdeficits.RapidgrowthofinternationaltradeandinvestmentalsomadetheEurocurrencymarkettoprosper.CreditexpansionthroughtheEurocurrencymarketBankofAmericaHSBC(eurobank)AssetsLiabilitiesAssetsLiabilities

(-)$1mdeposit(+)$1mdeposit

(-)$1mdepositofU.S.companyatBankofAmericaofChinesefirm(+)$1mdepositofHSBCTheU.S.bankingsystemisnoteffected.OnemillioneurodollariscreatedinHongKong.

BankofAmericaHSBC(eurobank)AssetsLiabilitiesAssetsLiabilities(-)$1mdeposit(-)$1mdepositofU.S.companyatBankofAmerica(+)$1mdeposit(+)$1mloantoofHSBClocalfirmBankofChinaAssetsLiabilities

(+)$1mdeposit(-)$1mdepositofatBankofAmericalocalfirm2millioneurodollarsareinthesystem.CharacteristicsoftheEurocurrencymarketAbsenceofregulatoryinterference.LondonInterBankBidRateandOfferRatearecommonlyquotedrates.Thematuritiesofdepositsandloansareshort-termandthereisaclosematchingofdepositsandloans.LIBORformajorcurrencies

July29,2011

Overnight1month3month6month1yearU.S.$0.131250.191100.255500.430250.76025Euro0.945001.378751.556881.801382.16938Sterling0.571250.631880.832811.115001.58781Swissfranc0.071670.125830.241670.241670.52867Yen0.105940.140310.195310.340310.55938Canadian$0.996671.080001.180001.355001.85333InstrumentsinEurocurrencyMarketEurocreditorEuroloanisashort-andmedium-termbankloandenominatedinEurocurrency.Eurocommercialpaper(ECP)isashort-termnoteissuedbyabankorcompany.ThenoteisdenominatedinaEurocurrency.Floatingratenotes(FRNs)aremedium-termbondsthatpayfloatinginterestrate.TheinterestrateisusuallylinkedtothreeorsixmonthLIBOR.Syndicatedcredit(syndicatedloan)isaloanofferedbyagroupoflenderstoasingleborrower.Theloanisarrangedbyaleadbankwhoseeksotherbankstoprovideaportionofthetotalfundsneededandperformsadministrativeduties.Thepurposeofasyndicatedloanistospreadtheriskoftheborrower’sdefaultacrossmultiplelenders.InternationalCapitalMarketCapitalmarketisfortradingfinancialassetsandliabilitieswithmaturitiesgreaterthanoneyear.Bondmarket,stockmarket,home-mortgagesmarketaretypicalcapitalmarkets.Publiclytradedbondsareveryimportantsourceoffundsforfirmsandgovernmentsindevelopedcountries.Domesticdebtsecuritiesbyissuers’forselectedcountriesinbillionsofUS$

Country200820092010UnitedStates24,567.224,965.825,096.3Japan11,052.111,521.513,275.1France2,885.43,146.03,198.5Italy2,813.03,191.03,077.0Germany2,592.82,806.72,710.5China2,209.52,565.42,969.1UnitedKingdom1,219.31,548.81,679.8Canada1,033.91,304.31,388.5Internationalbondsandnotes–allissuers’

Byregionofissuers

AmountsoutstandinginbillionsofU.S.dollarsDecember2009December2010December2011Developedcountries26,061.226,772.228,063.6Offshorecenters243.3256.8250.2Developingcountries1,326.11,531.41,620.0Interorganizations792.4881.9958.4Thebondmarketsarebigbecause:Afirmcanissueonecommonstockbutitcanissuemanynotesandbonds;federal,state,andlocalborrowingisenormous.Domesticbondsareissuedbyadomesticborrower,tradedwithindomesticmarketanddenominatedindomesticcurrency.Theyareregulatedbythedomesticauthoritiesandtradedaccordingtodomesticconventions.Registeredbonds:Thebondsareissuedinregisteredform.EachIssuermaintainsarecordoftheownersofitsbonds.Thebondstypicallypayquarterlyorsemiannualinterest.U.S.,CanadaandJapanusuallyissueregisteredbonds.Bearerbondsarenotregisteredandcanberedeemedbytheholder.Theyareusuallyissuedwithannualcoupons.Theadvantageofbearerbondsistheykeepanonymityofthebondholders.Europeancountriesusuallyissuebearerbonds.Bondsareusuallyissuedatdiscount.Thepriceofabondinthesecondarymarketisdeterminedbytheprevailinginterestratesandthetimetomaturityofthebond.Internationalbondscanbetradedinadomesticmarket,andaforeignmarket,orboth.Internationalbondsincludeforeignbonds,Eurobonds,andglobalbonds.Foreignbondsareissuedindomesticmarketbyaforeignborrower,denominatedindomesticcurrency,marketedtodomesticresidents,andregulatedbydomesticauthorities.Forexample,aGermancompanyissuesdollardenominatedbondsinU.S.ThebondsareforeignbondsfromtheviewpointofanAmerican.InU.S.,foreignbondsarecalledYankeebonds.BulldogbondsinU.K.,SamuraibondsinJapanandPandabondsinChinaarealltheothernamesofforeignbondsinrelativecountries.Eurobondsaredenominatedinacurrencydifferentfromthecountrywherethebondsareissued.Forexample,adollardenominatedbondsoldoutsidetheU.S.isaEurobond.AsterlingbondsoldoutsidetheU.K.isaEurobond.GlobalbondsaretradedwithintheEurobondmarketaswellasinoneormorenationalbondmarkets.Usually,borrowersmustbelargeinvestment-gradeborrowers(typicallyAAA-rated)andmustborrowinactivelytradedcurrencies(dollarsoreuros).EurobondmarketAEurobondisabondissuedinacurrencyotherthanthatofthecountryormarkettowhichitisissued.Forexample,asterlingbondisissuedtoallcountriesexceptU.K.ThecausesforthecreationofEurobondweretheU.S.domesticregulationoncross-bordercapitalflows.InterestEqualizationTax(1963)andinterestwithholdingtaxdiscouragedforeignborrowerstoraisefundsinU.S.FeaturesoftheEurobondAbsenceofregulatoryinterferenceMostEurobondsare“straight”bonds.Equity-linkedbondsmeanstheholderhastherighttoexchangethebondsforstocks.Eurobondsareusuallymedium-termbonds.Eurobondsarebearerbondsandarefreeofwithholdingtaxes.InternationalStockMarketStockmarketsarefortradingcompanyequities.Firmsissuestockstoraiselong-termfunds.Globalizationresultsinthatfirmsraisesfundsinternationally.Internationalstockofferingsincreaseafirm’spublicawareness.Internationalstockofferingsexpandstheinvestorbaseofthefirm’sstock.Majorstockexchangesintheworld

December31,2010billions$

Marketcapitalization1U.S.andEuropeNYSEEuronext15,9702U.S.andEuropeNYSDAQOMX4,9313JapanTokyoStockExchange3,8274UnitedKingdomLondonStockExchange3,6135ChinaShanghaiStockExchange2,7176HongKongHongKongStockExchange2,7117CanadaTorontoStockExchange2,1708IndiaBombayStockExchange1,6319IndiaNationalStockExchangeofIndia1,59610BrazilBM&FBovespa1,514U.S.StockMarketNYSEEuronextisthelargeststockexchang