As all the Financial Markets in India together form Indian Financial Markets, all the Financial Markets of Asia together form Asian Financial Markets;
likewise all the Financial Markets of all the countries of the world together form Global Financial Markets.
Financial Markets deal with trading (buying and selling) of financial securities (stocks and bonds), commodities (valuable metals or food grains),
and other exchangeable but valuable items at minimum transaction costs and market efficient prices.
Financial Markets can be domestic or international. The Global Financial Markets work as a significant instrument for improved liquidity.
Financial Markets can be categorized into six types:
- Capital Markets: Stock markets and Bond markets
- Commodity Markets
- Money Markets
- Derivatives Markets: Futures Markets
- Insurance Markets
- Foreign Exchange Markets
The Financial Markets play a major role in the Global Economy. It helps businesses to raise capital (in capital markets), they facilitate transferring of risk (in derivative markets), and they help international trade (in currency markets) to prosper.
The International Stock Markets form a major part of the Global Financial Markets.
The Amsterdam Stock Exchange (or Amsterdam Beurs) is the oldest stock exchange, which started operating in continuous trade in the earlier part of the 17th Century.
Some of the Important Stock Exchanges of the world are:
The New York Stock Exchange (merged with Euronext): The New York Stock Exchange (NYSE) is a stock exchange based in New York City, USA. It was incorporated in 1817. In terms of dollar volume, it is the largest stock exchange in the world and in terms of the number of companies listed; it is the second largest stock exchange in the world. The NYSE is also known as the Big Board. The indices used in NYSE are NYSE Composite Index and Dow Jones Industrial Average Index. The NYSE functions under NYSE Euronext. The formation of NYSE Euronext was the result of NYSE's merger with Archipelago Holdings and Euronext.
Tokyo Stock Exchange: The Tokyo Stock Exchange (TSE) is located in Tokyo, Japan. In terms of monetary volume, The Tokyo Stock Exchange is the second largest stock exchange in the world, only next to New York Stock Exchange. It was incorporated in 1949. The indices used in TSE are Nikkei 225, Topix, and J30.
NASDAQ: National Association of Securities Dealers Automated Quotations or NASDAQ is an electronic stock market based in New York City, USA. It was incorporated in 1971. The NASDAQ Stock Market, Inc. is the owner and regulator of NASDAQ. The main index used in NASDAQ is the NASDAQ Composite.
London Stock Exchange: The London Stock Exchange (LSE) is one of the oldest and largest stock exchanges in the world. It was established in 1801. In terms of market capitalization, the London Stock Exchange was ranked 4th among all the other important stock exchanges in the world in March 2007. The London Stock Exchange is located in Paternoster Square near St. Paul's Cathedral, London. The stock market index of London Stock Exchange is the Footsie (FTSE).
Euronext (merged with NYSE): Euronext N.V. is a pan-European Stock Exchange, which is based in Paris. It was founded in 2000. In terms of market capitalization, Euronext ranks as the fifth largest stock exchange in the world. There was a merger of Euronext with the NYSE Group, which led to the formation of NYSE Euronext and it is the first global stock exchange. The main indices used in Euronext are the Euronext 100 Index and the Next 150 Index.
The Bombay Stock Exchange (BSE): The Bombay Stock Exchange is the oldest stock exchange of Asia. It is located in Mumbai, India. It was founded in 1875. The main index of BSE is called the BSE Sensex (Sensitive Index) or the BSE 30. In terms of volumes of transaction, the BSE was ranked as one of the top five stock exchanges in the world in 2005.
Some jargons that are used in the Global Financial Markets are:
- Geek, a Quant
- Grim
- Nerd, a Quant
- Quant
- Big Swinging Dick
- Rocket Scientist
- White Knight
Today equity research has become a specialized activity although confined to a very small segment of the market. It would be a little early to consider equity research as an independent business segment but at the same time it must be appreciated that the value of equity research is being felt by the market. This is an interesting stage in the growth and development of equity research especially in a situation where the traditional individual investor is unwilling to pay for vital stock related information while the institutional investor is already paying for research reports.
The phenomenal growth of the financial markets over the last quarter of a century meant that the very character of investment has changed with ever larger scales of market capitalization. The emergence of the Fund Manager as a new value addition in investment related financial services is actually a part of the growth and development of the institutional investor. The fund manager’s sole objective is to ensure maximum returns for his clients whose money he invests working in tandem with research inputs. The fund manager and his client are a vital part of the institutional investment process sustained by an advanced and research driven to approach to capital market investment.
Equity research still has some time to develop as a sustainable business model but like any other research activity it has its limitations in developing into a booming business. Institutional investors are willing to pay ever higher amounts for in-depth and precise research in accordance with their requirements. Some of the modes of equity research are:
- Fundamental Analysis
- Technical Analysis
- Securities Market Analysis
- Index Momentum Analysis
- Securities Momentum Analysis
- Securities Chart Analysis