Abstract
Liquidity is an important factor for the proper functioning of the securities market. Deeply liquid markets allow investors buy or sell large amounts of securities without affecting their prices. Liquidity of securities may affect their prices and frequency of trades: investors would sell papers with discount or wait for relevant buyers with adequate prices. There is low liquidity of corporate bonds markets in countries with emerging economies. During crisis time in the market the risk of liquidity emerges and bonds become quite difficult to sell, not to mention the sale under usual conditions. From foreign investors’ perspective bonds issued in local currency could be risky as well. During market crisis the correlation between liquidity and currency strength becomes positive. On some emerging markets there was a problem of pricing of bonds due to few trades with bonds. Absence of daily quotes for corporate bonds under conditions of low liquidity of government bonds could pose a problem. For instance, in the bond market in Chile despite of institutional investors, there was no daily market value of bonds due to low market liquidity. The author analyzed trades with corporate bonds for the last 5 years. The author found out low frequency of trades and absence of up to date prices for some maturities. As a result, the Kazakhstan securities market operates a fragmented interest rate yield curve with yields on multiple maturities.
Highlights
Liquidity is an important factor for the proper functioning of the securities market
From foreign investors' perspective bonds issued in local currency could be risky
On some emerging markets there was a problem of pricing of bonds
Summary
Аннотация Ликвидность является важным фактором для нормального функционирования рынка ценных бумаг. Глубоко ликвидные рынки позволяют инвесторам приобретать или продавать большие объемы ценных бумаг без влияния на их цены. Ликвидность ценных бумаг может влиять на их цену и частоту сделок: инвесторы могут продавать бумаги с дисконтом или будут ждать подходящего покупателя с адекватной ценой. Во время кризиса на рынке возникает риск ликвидности и становится крайне сложно продать бумаги, которые в нормальных условиях редко торгуются.
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