Recent Development In Global Financial Market 5w2y57

Recent development in Global Financial Market............................. . Change is the only constant thing in the world. Lot of up and down happened in the world , The market went up and down, Organization failed, they succeed too. The financial market is like water which fall as rain and make our life happy and on the contrary as flood which make like miserable.

1. Central government started pouring money  Cut in 50 basic points in interest rate.  Actual reason was firms greed to get 2 digit growth rates. 2. Rising of interest rate to prevail fair price  Over and under pricing lead to crisis.  It create a balance between actual demand and supply 3. Regulated financial market  For sustainable and overall development.  Innovative financial engineering with calculated risk portfolio’s. 4. More transparent Systems.  A regulatory body is formed to supervise the work of Credit agencies.  No sophisticated and opaque financial assets.  Check on bank to involved in risky balance sheet activities. 5. Long term vigilance of monetary policies.  Easily available finance lead to over valued product and fake demand.  It create an imbalance in global finance.  Policy maker should stand ready to mitigate the macroeconomic effect and take corrective action.

Liberalization of global financial market......................................... Few regulation and restriction in the economy in exchange for greater participation of private players. To remain competitive Developed countries followed the path of      

Economic liberalisation Privatisation of Govt institution and assets Labour market flexibility Lower tax rate Less restriction in global and domestic capital. Open markets.

Developing countries also opening their economy to foreign capital and investments. (BRIC) Some countries are still a closed economy like North Korea and OPEN countries as they are self sufficient economies.

Liberalisation of services.................................................................... Liberalisation   

Opportunity to compete internationally. Contribute to GDPP growth Generate foreign Exchange.

Indias IT services become internationally competitive as lot of MNC have outsourced certain istrative functions as the cost are lower. If the service provider is not so competitive than oversee company will be attracted to invest, bring with them the international practices an\d technology and skills. It leads to   

Better services for domestic industries Improve the performance of domestic service provider. Attract FDI to country

Potential Risk of trade liberalisation.....................................................

Economies liberalization requires effective management by government. Sometime the foreign company’s crowd out the domestic service provider and instead of leading to investment and transfer skills and it allows foreign player and stale holder to capture the profit for them. So its being argues that domestic companies should be given time to developer before opening of any sector for the foreign players. Other potential risk is   

Risk of financial instability resulting from foreign congestion. Risk of brain drain Risk of environmental degradation.

But all research has shown that the risk are outweighed by benefit and what is messed is careful regulation for example the companies can skim off the most profitable customer or areas such obligation are being solved by licensing and universal service obligations.

INTEGRATION IN GLOBAL FINANCIAL MARKET.............................................. Recent development has reinforced the stability of global banking and financial market.

This can happen only when everyone follow the best practice standard. It’s a dynamic process. Rapid changes take place in the financial instrument and financial markets. Everything has to supervised and regulated effectively. The best practices should be kept on changing as because with the time es they must not be good enough. Today the market is one, the economies are open to each other, and small change in one economy can affect the other, as we are t together financially. There are so many instrument through which a company or organisation can invest their money in other countries too. The other market and countries can have amazing contribution to domestic economy may be in term of foreign exchange or taxes.

INNOVATION IN GLOBAL FINANCIAL MARKET FINANCIAL Innovation is basically for diversification of risk and yield better returns. They are in the form of different kind\d of instruments and gives us low cost and efficient method of investment, So Basically they to    

Reduce the risk Cost effective Efficient Better returns.

Some example of financial innovations are     

New financial intermediaries (VC Funds). New financial instruments (Collateral loans, derivative contract.) New financial Market(insurance) New financial services(e-trading, e-banking New financial techniques (Value based investing, aggressive investing.)

New financial instruments are good for host countries as they transfer the risk to the one who can’t bear it to the one who are better equipped to bear it.

India and the Global Economy India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries such as China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework. As the economic pace is picking up, global commodity prices have staged a comeback from their lows and global trade has also seen reasonably healthy growth over the last two years.

Economic Prospects The global economy seems to be recovering after the recent economic shock. The Indian economy, however, was hit in the latter part of the global recession and the real economic growth has witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring. The global economies are expected to continue to sustain themselves in the short-term, as the effect of stimulus programs is yet to bear fruit and tax cuts are working their way through the system in 2010. Due to the strong position of liquidity in the market, large corporations now have access to capital in the corporate credit markets.

India’s Economic Outlook Projection

2007

2008

2009

2010

GDP Growth

9.40%

7.30%

5.40%

7.20%

I

6.40%

9.30%

5.50%

4.90%

Indian Economy 2010 In order to keep up the economic growth during times of the worst recession, government authorities in India have announced the stimulus packages to bolster economic growth. To finance the stimulus packages, the Indian government has raised over $100 billion over the last four quarters. The country’s public debt, according to the Reserve Bank of Indian (RBI), has zoomed to more than 50% of the total GDP and the RBI has started printing new currency notes.

Central Government Debt in Rs. Crores (10 Million)

Q3 2008

Q3 2009

% of GDP

Public Debt (Sum of 1 and 2)

2,099,286.23

2,505,450.74

50.71%

1. External Debt

237,351.77

294,941.67

2. Internal Debt

1,861,934.46

2,210,509.07

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