International Capital Market Research Articles

Examining Global Resource Mobilization: Strategies and Hurdles in Accessing the International Capital Market

The role of finance is indispensable for business entrepreneurs as it fuels both fixed and working capital, driving growth and operational efficiency. Financial decisions are crucial for directing business growth from its inception through various phases. Corporate finance is pivotal in exploring alternative methods to finance fixed and working capital needs. Capital markets, including domestic ones like India's Securities Exchange Board-regulated and international markets, serve as vital platforms for businesses to secure funding and ensure smooth operations. Effective corporate governance, shareholder wealth maximization, regulatory compliance, profitable project funding, and global brand recognition are key goals for corporations to sustain and thrive. This paper aims to delve into the Overseas Depositories' role in international capital markets, highlighting their contribution to funding corporations globally. It will also discuss the significance of two-way fungibility in trading shares and depository receipts across borders, and how overseas depositories facilitate finance raising for corporations. Additionally, the paper will examine the trading dynamics of American and Global depository receipts vis-à-vis shares in the international capital market context.

Analysis of the Impact of Capital Market Internationalization on Corporate Financing Structure and Business Strategy

With the acceleration of globalization, the internationalization of the capital market has had a profound impact on corporate financing structure and operating strategy. This paper aims to explore the impact of the internationalization of the capital market on corporate financing structure and operating strategy. By analyzing the concept, characteristics, and development history of the international capital market, it deeply analyzes the factors influencing the evolution of corporate financing structure under the international capital market. Furthermore, it discusses the impact mechanisms of the international capital market on corporate strategic positioning, growth strategies, and risk management strategies, with the purpose of providing theoretical support and practical guidance for enterprises to cope with the challenges of globalization.

Sukuk Development in Indonesia: VosViewer Application

The concept of sharia-based finance is currently growing rapidly. One form of Islamic financial instrument that has been widely issued by both corporations and countries is sukuk. Sukuk is one of the most innovative product forms in the development of the contemporary Islamic financial system. It can be concluded that sukuk is an alternative source of funding, especially for governments and corporate companies. The growth of sukuk has increased sharply compared to other Islamic financial instruments, the growth reached 84% per year if analyzed from 2001 to 2007. Thus, sukuk has developed into one of the most important mechanisms in improving finance in the international capital market through an Islamic acceptable structure. This study aims to determine the development of Sukuk in Indonesia research trends published by leading journals on Islamic financial economics. The data analyzed consisted of 47 indexed research publications. The data was then processed and analyzed using the VoSviewer application to find out the bibliometric map of Sukuk in Indonesia research development.

Testing of Portfolio Optimization by Timor-Leste Portfolio Investment Strategy on the Stock Market

An efficient and effective portfolio provides maximum return potential with minimum risk by choosing an optimal balance among assets. Therefore, the objective of this study is to analyze the performance of optimized portfolios in minimizing risk and achieving maximum returns in the dynamics of Timor-Leste’s equity portfolio in the international capital market for the period from January 2006 to December 2019. The empirical findings of this study indicate that the correlation matrix showed that JPM has a very strong positive correlation with one of the twenty assets, namely BAC (0.80). Moreover, the optimal portfolio of the twenty stocks exceeding 10% consists of four consecutive stocks, namely DGE.L (10.69%), NSRGY (10.37%), JPM (10.04%), and T (10.03%). In addition, the minimum portfolio consists of two stocks with a minimum variance of more than 10%, namely SAP.DE (11.20%) and DGE.L (10.39%). The evaluation of the optimal portfolio using Markowitz parameters also showed that the highest expected return and the lowest risk were 1.22% and 3.12%, respectively.

Debt Economy and Class Transformation in Tunisia: A Critical Comparative Analysis (1860s–1970s)

The progressive integration of Tunisia into the international capital market implies deep institutional and social transformations as well as the positioning of the country in the semi-periphery of the capitalist world-economy. From the mid-19th and during the twentieth century, the growing Tunisia’s debt paved the way to a compulsory financial administration of the North African country by 1870. Likewise, this process favoured the development of a capitalist class, whose origins were both exogenous and endogenous, drawing its power from doing business with the global financial élites. Thus, we assist to the birth of a capitalist class with local and international interests, also called afterward compradors. Adopting an original comparative approach, this article shows that the integration of a country into the global economy, mainly when occurring through a growing foreign debt, paves the way not only to the birth of a local capitalist class drawing its power from the circulation of capital but also to the permanent positioning of the country in the semi-periphery of the capitalist world-economy. The access to the international capital markets, according to the rules of the controlling powers and elites, makes the indebted country less independent in its economic policy choices, thus modifying its class structure in favour of the new capitalist elites, and their interests.

Special Issue on Securities Market: Governance, Instruments and Regulations for Sustainable Development

The National Institute of Securities Markets (NISM), along with the Systemic Risk Centre (SRC) at the London School of Economics (LSE), is organizing The Fourth Annual International Capital Markets Conference 2023 on "Securities Market: Governance, Instruments and Regulations for Sustainable Development" sponsored by State Bank of India.

Comparison Analysis of the Valuation Difference Between A-Share & Hong Kong Stock

Since the 21st century, China's economy has shown a medium-rapid development trend. To be specific, a large amounts of enterprises have chosen the financing strategy of dual listing in the Chinese market and the international capital market in the development and development process of China's capital market. As a matter of fact, with different trading mechanisms and valuation strategies everywhere, the share price of the same company in different markets is also biased. On this basis, in order to explore this phenomenon, this study selects Tsingtao Beer, the first local Chinese enterprise listed in the A-share market and H-share market in the A-share market, as the research object. The aim is to systematically evaluate the enterprise through the cash flow discount method. According to the analysis, this study compares and analyzes the reasons behind the stock price difference, and gives investors more scientific theoretical investment suggestions. Overall, these results shed light on guiding further exploration regarding to dual listing investment analysis.

Neighbors in space: Satellite imagery and Chinese B-share discount

In this study, we examine how the effectiveness of satellite imagery affects stock price efficiency in the international capital market. With advancements in remote-sensing technology, sophisticated international investors have better access to detailed and real-time indicators of firm fundamentals through satellite imagery since the last decade. Our findings indicate that the availability of satellite imagery effectively mitigates the inefficient B-share discount in China by potentially addressing information asymmetry. Furthermore, we highlight the role of satellite data as a valuable complement to traditional information sources as well as its ability to monitor companies with unreliable disclosures. This study contributes to the literature on big data and capital market efficiency, while also offering policy implications for the technological advancement of the financial industry and the high-quality opening of the Chinese capital market.

Аналіз стану організації довгострокових портфельних іноземних інвестицій у Республіці Польща: уроки для України

The article describes the process of creation of the European international capital market, new financial instruments and formation of an investment portfolio from them in order to achieve the main goal of the investor – diversification, caused by investor’s desire not to participate in the operational management of the enterprise, however reducing the risk and maximizing the return on investment of his capital. The article then reviews the recent CEE Capital Markets conference, which was held in Poland, and concludes that by many criteria the Polish capital market is the largest in the region. In addition, the article emphasizes that foreign investment inflows to Poland reached a record level in 2021-2022. Therefore, based on all this data, the article analyses in detail the attraction of foreign investment into the economy of the Republic of Poland, taking into account three main prerequisites, namely: the establishment of uniform and unchanging rules of the game by creating an institutional framework for investment and ensuring the development of capital market infrastructure; ensuring the management of the Polish capital market with the help of two main players (the Central Securities Depository of Poland and Polish Financial Supervision Authority), shaping the professional activities of market participants and providing the supervision. The subsequent analysis of the state of Poland investment activity, presented in the National Banks Report “Poland International Investment Position for 2021”, showed that all this has played a significant role in attracting long-term portfolio investments, the biggest share of which is treasury debt, to the neighbouring countrys economy in recent years. Drawing a parallel with the current situation on the Ukrainian securities market, the article goes on to note that its regulatory framework generally meets the contemporary requirements. The other two prerequisites for creating acceptable conditions for a foreign portfolio investor are only under establishment. Right now, there is an urgent need to start building the infrastructure of Ukrainian securities market with the help of a neighbouring country.

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

Could Investors’ Attention in News Hunting Affect the International Capital Market?

Could Investors’ Attention in News Hunting Affect the International Capital Market?

Новітні інструменти фінансування сталого розвитку

Introduction. Conducting business activities aimed at obtaining profit without taking into account the negative impact on the social and environmental environment has led to the accumulation of problems in the specified areas. Awareness of the current situation led to the development of the concept of sustainable development and the formulation of 17 Sustainable Development Goals, the implementation of which will contribute to ensuring both economic, social and ecological dimensions of human progress. Problem Statement. Among the newest instruments aimed at financing with a positive impact on the economic, social and environmental dimensions of sustainable development, special purpose bonds (green, social, sustainable bonds, etc.) should be singled out. The purpose of the article is to determine the composition of the newest instruments of sustainable development financing, to improve their classification, and to generalize trends in their use in the world. Methods. The principles and guidelines of the International Capital Market Association for the issuance of special purpose bonds are analyzed, the methods of generalization and analysis of dynamic series are used based on the data of the International organization “Climate Bonds Initiative” about special purpose bonds. Results. The classification of special-purpose bonds was improved, in particular, the widespread features of their classification were supplemented with features based on the level of achievement of the set goals and the readiness of legislation of the issuance of special purpose bonds. The global trends as for the development of special purpose bonds were clarified, namely: the largest volume of issuance and growth rate for 2014-2021 is precisely for green bonds, which is explained by the beginning of the practice of issuing bonds with a positive impact by supranational organizations in the world precisely from the issue of green bonds; the largest volume of issuance of special purpose bonds is inherent for developed markets and, in recent years, for emerging markets; the leader of issuing of all types of these bonds during 2016-2021 is Europe; the largest specific weight of the issued special purpose bonds in the world is inherent for hard currencies: the euro and the U.S. dollar; key issuers of these bonds are financial and non-financial corporations, as well as institutions supported by the government. Conclusions The classification of special-purpose bonds has been improved, in particular, the common features of their classification have been supplemented with features based on the level of achievement of the set goals and regularity of the issue. Accordingly, it is advisable to continue to support the initiative of financial corporations regarding the issue of special purpose bonds as powerful institutional investors. This will make it possible to maintain the growing trend and strengthen financing and achievement of the Sustainable Development Goals. It is expedient to carry out the further research in this field in the direction of developing mechanisms for activating the use of the newest instruments of sustainable development financing.

Tax competition with asymmetric endowments in fossil resources

This paper contributes to the theoretical understanding of strategic interactions of governments on global markets for fossil resources and for capital. We analyze carbon taxes and subsidies and their impact on national welfare in a two country model with markets for capital and fossil resources, and asymmetric resource endowments. Resource poor countries have an incentive to tax the use of fossil fuels to appropriate the resource rent. Resource rich countries subsidize fossil fuel use to attract production factors in order to increase national income. We have two main results. First, we demonstrate that capital mobility has a taming effect on the incentives to tax and to subsidize resources. When taxing resources not only affects the international resource market, but also the international capital market, taxation is more distortionary and is thus more costly to governments. Second, while early studies of asymmetric tax competition found that small countries in terms of population are winners of tax competition, we show that with asymmetric resource endowments but a symmetric population size, there are no winners. Then, the Nash equilibrium of carbon tax competition is the least desirable outcome in terms of social welfare. A game structure similar to a Prisoner’s Dilemma emerges and cooperation makes Pareto improvements over the Nash equilibrium possible.

Contemporary trends on global corporate ESG bond market

Aim. The presented study aims to identify current trends in the global corporate bond market with environmental, social, and management objectives of the issuance of ESG bond and to assess the prospects for their development.Tasks. The author analyzes the segments of the global ESG bond market; determines the causes of the emerging trends and their impact on the state of global ESG financing.Methods. This study uses general scientific methods of cognition, in particular induction and deduction, synthesis, comparative and retrospective analysis. The fundamental regulatory documents of ESG bond taxonomy are investigated, and statistics from representative sources are analyzed. The latter include International Capital Market Association, SPGlobal, Barclays, Goldman Sachs, Refinitiv, and Climate Bond Initiative.Results. Based on the conducted research, the reasons for the active growth in 2021 and the slowdown in the development of the global ESG bond market in 2022 are established, and its short-term prospects are assessed. The prospects are systematized according to ESG bond varieties. Analysis of the mutual influence of global trends on the state of the global ESG bond market indicates the prevalence of external factors.Conclusions. According to the results of the analysis, the ESG bond toolkit seems to be investment-relevant. In 2022, major discussions regarding global ESG debt revolved around market quality and potential greenwashing. Intensive measures are taken in these areas at the macro and micro levels. The volume of ESG bond issuance in 2023 should be restored as interest rates in developed countries stabilize and global inflation rates decrease. Experts remain positive in their expectations and forecasts for 2023, but the quality of green bond and bond related to sustainable development is alarming.

SEBI and the Reform on Sustainable Finance (Part 1 of 3)

Frequent environmental disasters and extreme weather events have led to the crying need for dealing with climate change and the need to finance the same sustainably. Corporate finance being driven purely by wealth maximization / profit motive, without considering the environmental and social impacts of the activities of the firms, has alleviated the need for sustainable finance. To provide for the avenues to both issuers and investors for sustainable finance, Governments and Capital Market Regulators across the globe have come up with various policy measures including frameworks pertaining to sustainable finance; SEBI regulates the capital market in India and has come up with the framework for green debt securities for the listed/propose to be listed issuers and the same have been amended from time to time to cater to the changing market landscape. While sustainable finance is gaining popularity, concerns regarding the greenwashing are also rising across the globe as there is no universal consensus on “what is green”. SEBI has addressed the issue of the greenwashing by strengthening the disclosure requirements and prescribing certain dos and don’ts to avoid the instances of the greenwashing. The article, in three parts, focuses on the SEBI’s efforts to align its green bond framework with the updated Green Bond Principles (GBP) of International Capital Market Association (ICMA) while incorporating the domestic market needs by including “transition finance” in the definition of green debt security.

ВПЛИВ ДІЯЛЬНОСТІ ТРАНСНАЦІОНАЛЬНИХ БАНКІВ НА БАНКІВСЬКУ СИСТЕМУ

In the current stage of international economic relations and the global economy, globalization and transnationalization are key processes present in all areas of the economy, including the banking system. Transnational banks play an important role in international economic relationships by acting as intermediaries on the financial market. Thus, their role is growing in the condition of further development of the globalization process. Transnational banks are spreading all over the world due to the increase in demand for banking operations and the rapid growth of the international capital market, creating branch systems in foreign financial markets by connecting with the banking capital of various states. Although domestic and foreign scientists have covered studies on the impact of the activities of transnational banks in the conditions of globalization of the world economy, some issues related to the effectiveness of the activities of transnational banks and the regulation of TNBs require further consideration. The object of the research is the largest transnational banks in the world, while the subject of the research is the activity of the largest transnational banks in the situation of transnationalization and globalization processes' development. The article aims to examine the concept of a transnational bank as a subject of the international banking system, determine the impact of the presence of a transnational bank on the country's economy in the context of globalization, and analyze the impact of the activities of transnational banks and banks with foreign capital on the banking system of Ukraine. The main research methods used are the statistical method, synthesis method, system-structural method, and generally philosophical method. The research results analyze the positive and negative effects of TNB activities, define the consequences of the influx of foreign capital, and identify situations where it is worth restraining the activities of transnational banks and where, on the other hand, it is worth encouraging the placement of branches of transnational banks in the country.

Social bonds and the “social premium”

Social bonds (SB) have witnessed an unprecedented increase especially since the outburst of the Covid-19 pandemic, but their performance vs. conventional bonds (CB) has not yet attracted attention in the academic literature. As far as we know, this is the first paper to test the existence, the sign and the determinants of a “social premium”, which we propose here to define as the yield differential between a SB and an otherwise identical CB. To this end we set up a sample of 64 SB aligned with the International Capital Market Association principles and 64 (exactly) matched CB, from October 2020 to October 2021 so as to focus on the peak of SB issuances. Regressions are based on the hypothesis that daily yield differentials between SB and CB may be determined by differences in non-perfectly matched characteristics. Based on the FE specification, which turns out to be preferred vs. OLS and RE both theoretically and empirically, two main results emerge. First, the social premium is significantly explained by differences in liquidity and in volatility, which are, respectively, negatively and positively correlated with the yield differential. Second, on the whole sample, the analysis of the fixed effects proves the existence of a significant and positive social premium that amounts to 1.242 bps. This result is robust to outliers, but differences emerge on subsamples especially in relation to issuer sector, thus pointing to the relevance of the use of proceeds, an issue that deserves further investigation as the SB market becomes more mature.

The GMRA Framework Agreement as an Example of Standard Documentation on the International REPO Market

The paper provides a general description of the contractual standards of the International Capital Markets Association (ICMA) for concluding and executing over-the-counter repo agreements and focuses on the GMRA 2011 — the most relevant standard agreement of this Association. The author underlines insufficiency of international unification of legal regulation in the field of securities markets, which leads to the need for contractual unification by the participants of such markets themselves. The paper consistently examines general characteristics of the repo agreement, work of the Association in preparing standard documentation, the mechanism of a crossborder repo agreement in accordance with the GMRA 2011 agreement. It is noted that the provisions of this agreement on the procedure for concluding individual repo transactions are highly flexible, and the rights of a party in case of violation of the agreement are protected using the liquidation netting mechanism. The advantages of using ICMA documentation include the availability of country applications that bring it into line with the requirements of local legislation in certain countries, as well as regular updating of standard contracts. Successful application of GMRA 2011 in transactions with Russian counterparties is facilitated by its recognition by the Russian regulator as approximate terms of the repo agreement, a special country application, and translation of the agreement into Russian. In the context of sanctions pressure and the presence of Russian anti-sanctions, the possibility of using the GMRA agreement in transactions with counterparties from «unfriendly» countries seems difficult. However, ICMA documentation can still be used for repo transactions with parties incorporated in other regions, making it possible to refocus the Russian financial sector to Asian markets.

Placement of social bonds through crowdfunding: Global trends and prospects for implementation in domestic practice

The article considers the possibility of using additional sources of financing in the construction and operation of social infrastructure facilities. We are talking about the use of social bonds. The idea belongs to the International Capital Markets Association (ICMA), where the issue of social bonds is designed to solve specific problems of society, ensuring the saving of public fundsThe issue and circulation of social bonds must comply with a number of principles: the mandatory use of funds from the placement of these bonds for the development of the company, special criteria for the selection of projects of social impact and assessment of social effect, requirements for disclosure of information and its transparency. At the same time, it is necessary that investment projects are aimed at achieving positive social results that can be quantified. An attempt was made to develop measures to combine the instrument of social bonds and the principles of investment crowdfunding for the accumulation of funds by municipalities. The theoretical and methodological basis of the study was the work of domestic and foreign scientists in the field of analyzing government debt obligations to expand investment in infrastructure facilities at the regional and local levels, as well as research on the use of crowdfunding in the implementation of non-capital-intensive investment projects. The information base of the study was compiled by analytical reviews of the National Center for Public-Private Partnership, data from domestic statistics, analytical reviews of the Bank of Russia.

An Empirical Investigation on Capital Market Integration of Asian Countries

The integration of capital markets is an interesting topic for researchers in the stock market, so it is Not surprising if there have been a lot of researches on the integration of capital markets. Financial Integration is a phenomenon in which financial market in neighbouring, regional or global Economies are closely linked together. Various forms of financial integration include information Sharing among financial institution, firms borrow and raise funds directly in the international capital Markets, newly engineered financial products are domestically innovated and bought in the International capital market, investors are directly invested in international capital market etc. The Association of South East Asian Nations (ASEAN) was founded on Aug 8, 1967 by five countries Namely Indonesia, Malaysia, Philippines, Singapore, and Thailand. They were later joined by Certain other members.