1. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-1 Part VI International Capital Markets and Portfolio Investment Chapter 21A Tour of the World’s Capital Markets Chapter 22International Portfolio Diversification Chapter 23International Asset Pricing Chapter 24Managing an International Investment Portfolio

2. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-2 Chapter 21 A Tour of the World’s Capital Markets 21.1Capital Markets versus Money Markets 21.2International Debt Markets 21.3International Stock Markets 21.4Summary

3. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-3 Financial markets F Financial markets can be characterized in a variety of ways, including: »Form: Debt versus equity »Maturity: Money versus capital markets »Liquidity: Liquid versus illiquid

4. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-4 International debt markets F Debt markets can be further categorized as: »Intermediated versus non-intermediated (direct) debt markets »Internal versus external debt markets »Domestic versus international debt markets –Domestic bonds –Foreign bonds –Eurobonds –Global bonds

5. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-5 Bond market taxonomy (from a U.S. perspective)

6. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-6 Major government bond markets ($ billions) Source: Salomon Brothers Government Bond Indices (December 1998)

7. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-7 The world’s top international banks (ranked by percent of business outside country of origin) Percent of business outside country of originAssets BankCountry199619951994($bns) 1.Standard CharteredU.K.74.373.170.271.6 2.Credit Suisse HoldingSwitzerland74.268.766.4389.3 3.Union Bank of SwitzerlandSwitzerland71.067.062.2324.8 4.Credit Agricole IndosuezFrance70.3n/an/a477.3 5.Swiss Bank CorpSwitzerland64.658.047.1267.3 6.HSBC HoldingsU.K.62.864.862.3401.7 7.CiticorpU.S.59.657.645.6281.0 8.Comp Financière de ParibasFrance55.650.048.2290.7 9.Credit LyonnaisFrance52.546.453.6310.0 10.Creditanstalt-BankvereinAustria52.349.9n/a62.8 Source: The Banker (a Financial Times magazine), February 1995 & February 1998.

8. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-8 Features of the major bond markets (domestic and foreign) InternalWithholding tax bond marketOwnershipCouponsPrice quoteunder U.S. treaty CanadaRegisteredSemiannualActual/36515% JapanRegisteredSemiannualActual/36510% FranceBearerAnnualActual/3650-10% GermanyBearerAnnual30/3600% SwitzerlandBearerSemiannual30/3605% U.K.BearerSemiannualActual/3650% U.S.RegisteredSemiannualCorporate - 30/360 Treasury - Actual/365

9. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-9 Features of the Eurobond markets Type of bondOwnershipCouponsPrice quote Fixed rate bondsBearerAnnual30/360 Floating rate notesBearerQuarterly oractual/360 (FRNs) semiannual

10. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-10 Major stock markets ($ billions) Source: Financial Times - Actuaries World Stock Market Indices (December 1998)

11. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-11 Stock returns around the world Source: Morgan Stanley Capital International Indices

12. Kirt C. Butler, Multinational Finance, South-Western College Publishing, 2e 21-12 Stock exchange ownership and regulation F The New York Stock Exchange - a private exchange »private ownership »combines self-regulation with governmental regulations F The Frankfurt Stock Exchange - a banker’s bourse »public ownership »self-regulated - dominated by German banks F The Paris Stock Exchange - a public bourse »public ownership »governmentally regulated