Chapter 19
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Chapter 19. STOCK MARKETS AROUND THE WORLD. Overview. Multiple listings on national markets Trading costs in international stock markets Global Diversification correlation of world equity markets. United Kingdom. London Stock Exchange (LSE) ordinary shares of local and foreign firms

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Chapter 19

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Chapter 19

Chapter 19

STOCK MARKETS AROUND THE WORLD


Overview

Overview

  • Multiple listings on national markets

  • Trading costs in international stock markets

  • Global Diversification

    • correlation of world equity markets


United kingdom

United Kingdom

  • London Stock Exchange (LSE)

    • ordinary shares of local and foreign firms

    • private fixed interest securities

    • British government securities

  • Operations

    • OTC market

  • Reforms

    • Big Bang


Germany

Germany

  • Frankfurt Stock Exchange (FSE)

  • Market Segments

    • official market

    • regulated market

    • Neuer Market

  • Exchange Electronic Trading (Xetra)


Japan

Japan

  • Tokyo Stock Exchange (TSE)

    • first section

    • second section

  • Operations

    • continuous auction market

    • OTC market

  • Reforms

    • financial big bang


Chinese stock market

A shares

restricted to Chinese investors

denominated in Chinese yuan

limited to state-owned companies

Hong Kong

H shares

red chips

B shares

reserved for foreign investors

Shanghai B-shares are quoted in U.S. dollars

Shenzen B-shares are quoted in Hong Kong dollars

Chinese Stock Market


Recent european stock market reorganizations

Recent European Stock Market Reorganizations

  • London Stock Exchange

  • Deutsche Börse

  • Euronext

  • Other European Stock Market Activities

    • NASDAQ

    • NYSE


New european exchanges

New European Exchanges

  • Markets for Emerging Companies

    • Neuer Markt in Frankfurt

    • Nouveau Marche in Paris

    • Alternative Investment Market in London

  • Easdaq in Brussels


New japanese exchanges

New Japanese Exchanges

  • NASDAQ Japan

    • auction market

    • small issues are traded through the market making system

    • large issues are traded by the auction method


Ownership and control of national stock exchanges

Ownership and Control of National Stock Exchanges

  • Privately Owned Markets

    • United States, United Kingdom, Hong Kong, Canada, Japan, Australia

  • Public Institutions

    • France, Spain, Italy, Belgium

  • Banks

    • Switzerland, Austria


Trading procedures and computerization

Trading Procedures and Computerization

  • Continuous Market

  • Call Market

  • Computerized Trading


Dealers in major markets

Dealers in Major Markets

  • Specialist System

  • Competitive Dealer System

  • Computerization


Stock market indexes

Japan

Tokyo Stock Price Index (TOPIX)

Nikkei 225 Stock Average

United Kingdom

Financial Times-Stock Exchange 100 (FTSE 100)

Germany

Deutscher Aktienindex (DAX)

France

CAC 40

Others

Hang Seng Index

Morgan Stanley EAFE Index

Stock Market Indexes


Global depository receipt

Global Depository Receipt

  • Global Depository Receipt (GDR)

    • Bank-issued title to shares of stock traded in a foreign country.

  • American Depository Receipt (ADR)

    • Tradable right to a foreign share held in trust by a U.S. financial institution that issues the ADR.

  • Depository Receipt

    • combination of GDRs and ADRs


American depository receipt

Types:

nonsponsored

sponsored

Trading Location

NYSE

ASE

OTC market

Advantages

trade stocks on U.S. exchanges

payments made and received are in U.S. dollars

avoid some country-specific taxes

American Depository Receipt


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