語言文化論文-Why has the global capital market grown so rapidly in recent decades-Will this growth continue throughout the 2000s-.doc

語言文化論文-Whyhastheglobalcapitalmarketgrownsorapidlyinrecentdecades?Willthisgrowthcontinuethroughoutthe2000s?BU2207InternationalBusinessEnvironmentTutors:IreneGreaves,LindaOnyekaStudentName:SihaoXieDate:14JANUARY2002IntroductionDictionaryofBusinessdefinesthecapitalmarketasamarketinwhichlong-termcapitalisraisedbyindustryandcommerce,thegovernment,andlocalauthorities.Themoneycomesfromprivateinvestors,insurancecompanies,pensionfunds,andbanksandisusuallyarrangedbyissuinghousesandmerchantbanks.Stockexchangesarealsopartofthecapitalmarketinthattheyprovideamarketforthesharesandloanstocksthatrepresentthecapitalonceithasbeenraised.Itisthepresenceandsophisticationoftheircapitalmarketsthatdistinguishestheindustrialcountriesfromthedevelopingcountries,inthatthisfacilityforraisingindustrialandcommercialcapitaliseitherabsentorrudimentaryinthelatter.Theglobalcapitalmarkethasgrownsorapidlyinrecentdecades.SoIwouldliketodiscussaboutitintheessay.Thisessayisorganizedasfollow,introduction,body,conclusion.Inthebodypart,Section1showswhyhastheglobalcapitalmarketgrownsorapidlyinrecentdecades.Section2talksaboutthecontinuanceofthegrowththroughoutthe2000s.Body1.WhyhastheglobalcapitalmarketgrownsorapidlyinrecentdecadesInrecentdecades,theglobalcapitalmarkethasgrownsorapidlybecauseoftheriseofprivatizationsmainly.Withprivatecapitalflowsrisingfromlessthan5percentofworldGDPin1975toabout20percenttoday,privatizationshavesignificantlyincreasedmarketliquidity.Andalsoprivatizationtakesapotentialroleglobalcapitalmarketdevelopment.A.TheRiseofCapitalMarket-BasedFinanceCapitalmarket-basedfinancehasinfactbeenincreasinginimportance,bothabsolutelyandrelativetofinancialintermediary-basedfinance,inbothdevelopedanddevelopingcountriesoverthepastdecade.Andalsocapitalmarketsareinfactwinningthepresentandseemlikelytodominatethefutureofcorporatefinanceindevelopedanddevelopingcountriesalike.a.TheStableRoleofCommercialBankinginModernEconomiesOrdinaryrelationshipbankingappearstobe(atbest)holdingitsownasasourceofcorporatefinancingaroundtheworld,andismorelikelyindecline.Thebitsofbankingthataregrowingrapidlyarethosepartsthatprovidehighvalue-addedproducts(especiallyriskmanagementtools)andprovidelarge-scalesyndicatedcreditstocorporateborrowers.Duringthelate-1980sandearly-1990s,whenJapanandGermanyappearedtobeoutperformingmajorcapitalmarket-orientedcountriessuchasBritainandtheUS,theacademicliteratureoftenfavoredbank-basedsystems.ExamplesofthisliteratureincludeProwse(1992),Kester(1992),andPorter(1992),whilethesupportingargumentsaresummarizedinMaherandAndersson(1999)andTsuru(2000).Morerecently,however,theweightofopinionhasswungstronglyinfavoroftheideathatcapitalmarketshavedecisivecomparativeadvantagesoverbanksandotherfinancialintermediariesasoptimalmonitorsandfinanciersofanationscorporatelife.Thisreassessmenthasbeendriveninpartbytheobservation,discussedatlengthabove,thatcapitalmarketshavebeenprosperingrelativetobanksformanyyearsnow.Therepetitivenature-andmassivecosts-ofbankingcrisesindevelopinganddevelopedcountriesalikehasalsoconvincedmanyobserversthatbanksareinherentlyfragileinstitutions,whoseroleincorporatefinanceshouldbeminimizedasmuchandasquicklyaspossible(Economist(1997,1999).b.TheRapidGrowthinStockMarketCapitalizationandTradingVolumeSince1983From1983to2000,thiswasaperiodofveryrapidgrowthinthecapitalizationofmarketsineverycountryexceptJapan.Totalworldmarketcapitalizationincreasedoverten-fold(to$35.0trillion)between1983and1999,andthetotalcapitalizationoftheUSmarketincreasedalmostnine-fold(from$1.9trillionto$16.6trillion)overthesameperiod.c.TheDramaticGrowthinSecuritiesIssuanceVolumeSince1990Anotherwayofmeasuringtheriseofcapitalmarketsistoexaminewhethertheirshareofannualcorporatefinancingactivityhasgrownrelativetothatofothersourcesoffunding.SecurityofferingsbyUSissuersaccountedfortwo-thirdsoftheglobaltotalthroughout1990-1999,thatimpliesthatnon-USsecuritiesissuesincreasedfrom$191billionin1990to$750billionin1998,andthento$1.19trillionin1999.Thesurgeinnon-USissuancevolumein1999waslargelyduetothepopularityofeuro-denominatedbondissues,whichactuallyexceededdollar-denominatedbondissuesformuchof1999.d.ThePhenomenalGrowthinVentureCapitalFinancingintheUnitedStatesOnehighlyspecialized,butextremelyimportanttypeoffinancinghasalsogrownveryrapidlyoverthepastdecade,andespeciallysosince1997.ThisisventurecapitalinvestmentbyUSventurecapitalpartnerships.Thefund-raisingpatternsoftheseprivateequityinvestorsarediscussedinGompersandLerner(1998),andthecompetitiveadvantagesofUSventurecapitalistsversusthoseinotherdevelopedcountriesaredescribedinBlackandGilson(1998).e.TheSurgeinMergersandAcquisitionsWorldwideThealmostincredibleincreaseinthetotalvolumeofmergerandacquisitionactivitythathasoccurredsince1990.WhiletakeovershavealwaysplayedanimportantroleintheUnitedStates,theriseinM&A(MergerandAcquisition)activityinEuropeduringthe1990swasevenmoredramatic.Fromlessthan$50billionannuallyinthelate-1980s,thetotalvalueofM&AinvolvingaEuropeantargetreached$592billionin1998,beforemorethandoublingto$1.22trillionin1999-rivalingtheUStotal.TheglobalvalueofM&Aactivityin1999reached$3.4trillion,anastounding10%ofworldGDP.NextIwilldocumentthatshareissueprivatizationshavetrulytransformedshareownershippatternsofinvestorsinmanydifferentcountries.B.PrivatizationsImpactonStockandBondMarketDevelopmentWeshouldbecarefulininferringcausationregardingprivatizationsimpactonmarketgrowth,sinceashiftinideologyorsomeotherexogenouspoliticaloreconomicchangemighthavecausedboththeprivatizationandtheoverallboom.a.TotalProceedsRaisedbyPrivatizationProgramsItisclearthatnationalgovernmentshavebeenamongthebiggestwinnersfromprivatizationprograms,sincethesehavedramaticallyincreasedgovernmentrevenues,whichisclearlyonereasonthepolicyhasspreadsorapidly.Asmentionedabove,PrivatisationInternationalGibbon(1998,2000)reportsthatthecumulativevalueofproceedsraisedbyprivatizinggovernmentsexceeded$1trillionsometimeduringthesecondhalfof1999.Asanaddedbenefit,thisrevenuehascometogovernmentswithouthavingtoraisetaxesorcutotherpublicservices.b.PrivatizationsImpactonInternationalInvestmentBankingAllinternationalinvestmentbankscompetefiercelyforshareissueprivatizationmandates,fortwoprincipalreasons.First,becausetheofferingsaresolargeandsovisible-andarealmostalwaysdesignedtohelppromotethemarketscapacitytoabsorbsubsequentstockofferingsbyprivatecompanies-theseareveryprestigiousmandates.Todate,thelargeUSandBritishbrokeragehouseshavehadthemostsuccessinwinningadvisoryandunderwritingmandates,thoughallcountriesthatlaunchlarge-scaleSIPprogramstendtofavorlocalinvestmentbanksasnationalchampionstohandlethedomesticsharetranche.ThesecondreasonbankscompetesofiercelyforSIPmandatesisbecausetheycanbeextremelyprofitable.Inspiteofthefact-documentedbyJones,etal(1999)andLjungqvist,etal(2000)-thatSIPshavesignificantlylowerunderwritingspreadsthanprivatesectorofferings,theirsheersizeandlackofdownsidepriceriskmakethemverylucrativeforunderwriters.2.Willthisgrowthcontinuethroughoutthe2000s?Asweindicatedabove,theglobalcapitalmarkethasgrownsorapidlyinrecentdecadescauseoftheprivatizationsrise.Privatizationsincreasedthemarketliquidity.Nowwehavealreadysteppedintothe21stcentury.Ibelievethatthegrowthwillcontinueforthefollowingreasons.First,mostofthesouth-eastAsiacountrieshaverecoveredfromthe1997financialcrisis.Forthesecountries,theynowhavethecapitaltodobusinesses.Andtheygetbackonthefastgrowingtrack.Second,bytheendof2001,worldsbiggestdevelopingcountry,China,hasenteredtheWTO(WorldTradeOrganization).Thisisrealgreatnews.Asweallknow,todaysChinatakesaseriouspositioninworldseconomy.ItsinnovationandopeningpolicymakechinakeepachievinghighGDPgrowthrate.Thisdrivestheglobalcapitalmarketkeepgrowing.SummaryandConclusionsThisessayexaminestheimpactofshareissueprivatizati