The Business of Investment Banking

By K. Thomas Liaw | Go to book overview
Save to active project

10
Emerging Markets
Emerging markets are an integral part of the global capital markets. They present unique opportunities to bankers. To capitalize on the profit potential in investment banking operations in emerging markets, bankers should be aware of the specific environment in each sector of the market. This chapter describes the complex process involved in doing business in emerging markets. First, several risk factors are unique to emerging markets. This includes liquidity risk, political instability, insufficient legal infrastructure, and risk of contagion effects. Issuance and trading of Brady bonds have dominated emerging market activities for many years. However, there is no longer a pipeline of Brady restructuring to feed the market. Most Bradys will eventually be paid off, exchanged, or bought back in the secondary market. This chapter also covers equity trading and privatization programs in emerging markets, clearing and settlement of emerging market instruments, and emerging market derivatives, which are essential in winning business and hedging risks in emerging markets.
OVERVIEW
The term emerging market describes the securities markets of a developing country and the use that country makes of international capital markets. Emerging markets are increasingly an integral part of today's global capital markets. The implementation of economic reforms throughout emerging markets has created great expectations and optimism. Even though these emerging countries are still far behind the United States, Western Europe, and Japan, many developing countries are taking steps to build more efficient capital markets. These steps should target three areas:
1. Legal infrastructure for investor protection: The. fundamentals behind investor protection are full, accurate, and timely company financial reports and disclosure; fair securities issuance and trading practices; and the sanctity of contract law. All are essential if emerging markets are to achieve their key objectives.
2. Establishment of modern banking and securities laws: A good start for any country is a contract law, a company law, a banking law, and a justice system that enforces the law effectively.
3. Corporate ownership and governance: Expanding enterprise ownership is perceived as a means of increasing social stability in emerging markets. In recent

-167-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
The Business of Investment Banking
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 340

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?