A Guide to the International Equities Market, by Jonathan Clements provides the reader with a comprehensive view of the emerging international equity market. Clement’s implements his views, as well as the views of many members of leading financial institutions across the world, in order to surface multiple aspects of the developments and operations of the newly reforming global stock market.
This book caught my attention because during class we studied a whole chapter that focused on understanding securities and securities markets. As more and more people begin to take direct stakes in the stock market, I felt it was necessary to expand my knowledge about these markets, whether domestic or global. The newly evolving borderless global economy is paving the way for investors to become extremely profitable off of the international equity market as long as they know what they are doing. The purpose of this book is to give the reader insight into how the international equity market is changing and therefore give hints on how to invest into it successfully.
What is Rule 415 and what are its effects? Rule 415 was adopted by the SEC on November 10th 1983. Rule 415 Permits corporations to file a registration for securities they intend to issue in the future when market conditions are favorable. The implementation of Rule 415 has given the corporations issuing securities in the United States much of the freedom enjoyed by corporations issuing securities in the European markets.
Rule 415 allows United States corporations to respond much more quickly to market opportunities, selling their securities in almost any way. Instead of having to go through a series of middle men who negotiate lower prices at the end of a selling period, Rule 415 allows firms to purchase securities in advance. It also allows them to sell stock to investors directly, with no middle man involved at all. By allowing United States corporations to sell securities in this manner, there are no longer major differences between the US and the European dollar markets. Now that they are similar, investors from all over the world will no longer look at a certain market for certain attributes, which in the long run will expand the international equity market.
What is twenty-four hour trading and what will it provide? The emerging twenty-four hour global equities market is also known to some as the “continuous marketplace”. The formation of this marketplace will make it possible to complete a financial deal, somewhere in the world, at any time of the day. This does not mean that securities traders have to be at their desks for the whole twenty four hours.
This means that when the traders are at their desks, they will be informed with accurate and timely financial information and can make better decisions at any time of the day. By creating a twenty four hour market run mainly by automated technological systems, the boundaries between time zones and market hours will diminish. This will play a major role in the arrival of a global economy without boundaries.
Although the twenty-four hour marketplace is not fully available presently, a good example of such a development is the new “London Bridge”. This bridge provides an automated link between the London Stock Exchange’s SEAQ (Stock Exchange Automated Quotations) and the United States NASDAQ (National Association of Securities Dealers Automated Quotations) system. This link is the first intercontinental exchange of stock quotes and provides each other with live quotations from three hundred plus securities from each marketplace. With this kind of technology, traders can keep in instantaneous touch with each other and in the long run will increase investment capability.
What must a company do to successfully sell equity abroad? Like selling equity domestically, companies must be seen as a good investment to foreign investors as well. There are some key focuses that this book points out companies looking to sell equity internationally should focus on. Although there is always a risk of not selling, by following these guidelines the book lays out the author feels they will be successful. Companies must aim to be perceived as a company on the move or well positioned in an industry that is attracting interest because of its potential to change people’s lives or the way they do business.
When the internet was first introduced, companies focused on utilizing this technology to change people’s lives and in turn received large amounts of equity when they first started. Companies must also do their homework; know their investors as well as their needs and preferences. By doing this a company can focus on what investors want to hear, and therefore have more of a chance of getting them interested. As shown in our textbook, money can be invested in a variety of different ways, but no matter what way it is invested, a company must demonstrate management excellence and provide good after-sales service. An investor will not stick around long if the company it has its money in displays poor operation procedures and does not keep its consumers happy. By applying all of these techniques, companies have a better chance of selling equity internationally.
Over the past few years, investors have, as never before, looked abroad for undervalued investments in equity. Recent actions and advancements have further expanded the possibility for profit in international investment. The passing of Rule 415 in the United States by the SEC has enabled the United States corporations to capitalize more quickly on market opportunities. By doing this, United States corporations are able to offer securities in the same manner as European corporations. This causes investors bias of which equity to invest in to decrease and has raised the investments for both nations. Along with the passing of Rule 415 in the United States, international technological advancements have played a major part in increasing the international equity market as well.
The upcoming arrival of a twenty-four hour automated trading system will allow investors to make informative decisions at any time of the day. It will allow trading to occur in all stock markets throughout the world at any time and therefore increase investments. The success of such a system has been shown in the “London Bridge” mentioned earlier. Although these changes have helped expand the international equity markets, companies must still do the little things in order to sell equity abroad. As they do to sell stock domestically, companies must convince their investors that their stock is worth buying.
Management excellence and high quality after-sales service show investors that their company is a trustworthy one and can keep the consumers happy which in turn will keep the stock up. Investors have become increasingly interested in the international equity markets and to no surprise with all the changes recently. Many investors are starting to demand a diversified portfolio and see greater stability in international shares. As long as the demand is their, the international equity market will continue to grow at its rapid rate.