Abstract
International fund raising used to be the domain of multinational companies. MNCs not only source raw material across the world or sell products at many geographical regions, they also scouting for capital all over the world and raise capital where it is cheaper. Investors’ appetite for foreign company shares have also increased manifold and internationalization of equity market across globe is happening at a faster speed. However, internationalization of equity markets has a broader connotation covering entire gamut of FDI, portfolio investment by big ticket players like pension funds, hedge funds and private equity funds and their ilk, this module focuses on equity capital to have been raised by Industrial and Commercial Bank of China from the international market.
Get Help With Your Essay
If you need assistance with writing your essay, our professional essay writing service is here to help!
Essay Writing Service
Why ICBC felt the need to issue equity in markets outside of China
ICBC mainly issued equities to foreign markets to strengthen their corporate governance practices, risk management and internal controls, and enhance their treasury operations, asset management, corporate banking and investment banking operations as well as their non-performing loan disposal capabilities. For instance ICBC collaborated with Allianz to develop and provide bank assurance products and services to their customers; and as for American Express, ICBC began and continue to expand their cooperation on bankcard business, risk management and customer service to enhance its financial performance and efficiency.
Advantages and disadvantages of issuing equity in foreign markets
Through the move of issuing equity in markets outside china, ICBC is able to raise capital denominated in USD and that to huge amount of capital, which may be difficult to raise from the issuer’s home country. By issuing securities in a new market, it is able to expand the investor base. When ICBC’s share listed in a domestic market, analysts in the domestic market start analysing the company, its product; its market share etc. thus indirectly helps in advertising the company. When a foreign ICBC’s shares are listed in a domestic exchange and the foreign company wants to acquire another domestic company, then share swap can be an option for the foreign company. Despite the prime advantages of issuing equity to foreign markets, several obstacles may be present for instance companies have to pay for the, depository fee, listing fee, audit fee and also companies have to recast their annual report as per the GAAP of the foreign country.
Attraction of the ICBC in Regards To Providing Exchange Listings to Foreign Investors
As host countries are getting advantages of FDI and, the investors are also not far behind in terms of their benefits. Numerous factors attracted ICBC to provide exchange listings to foreign investors in a number of ways. ICBC was mainly attracted to exchange listings as it enhances the domestic competitiveness, provides the opportunity of taking significant advantages of international trade technology, contributes towards increasing of sales and profit, extends sales potentials of the existing products, and maintains cost competitiveness in the domestic market set-up. It also enhances possibilities of business expansion, helps in the process of obtaining global market share, reduce the dependency on existing markets, and also stabilize seasonal market fluctuations (Oman, 2000; Rajan, 2005; Rao et al.,1999). The advantages of FDI have been successfully utilized by ICBC in almost every sector.
Why investors should be interested in exchange listings
There are many benefits to why investors should be interested in exchange listings for instance income returns and price change. The income return represents periodic cash flows generated by the investment. These include dividends paid for ordinary shares and periodic interest paid for bonds. Stocks that pay dividends typically distribute them quarterly. Government bonds pay interest on a semi-annual basis, and debentures pay interest monthly, quarterly, semi-annually, or annually. Investors whose primary objective is to generate periodic income from their investments focus on the income return. Price change is the increase or decrease in price of the asset in relation to the purchase price or the market price in the previous time. An appreciation in the price of the asset is called a capital gain while a price decline is called a capital loss. The prices of assets such as stocks, bonds, and real estate fluctuate over time in response to a variety of factors such as economic news, industry conditions, company`s performance, political conditions, as well as speculation. While the investor expects a capital gain, there is no guarantee that the price will always increase in value. Those investors whose primary investment objective is capital appreciation focus on the price change component of return.
Risks for a foreigner associated with investing in ICBC
Stocks are volatile investments. The price of a single stock can vary quite widely from day to day, and the factors that cause these price fluctuations are beyond the control of the investor. Buying a widely diversified basket of stocks can be difficult for all but the wealthiest investor. Small investors are better off buying a quality stock mutual fund. Mutual funds pool the investments of many different people in order to buy a diversified set of stocks. This diversified approach helps to reduce the risk inherent in the stock market.
As investors near retirement, the amount of stocks in the portfolio should be reduced. Investors who are close to retirement age can no longer afford to take chances with their money, and that means moving a significant portion of their retirement funds to safer and more stable investments. Buying and selling stocks costs money in the form of brokerage commissions, and many brokerage firms charge account maintenance fees as well. It is important to look for low cost alternatives when buying and selling stocks.
References
Allen, F., J. Qian, M. Qian, and M. Zhao (2009). “A Review of China’s Financial System and Initiatives for the Future,” Chapter 1 of China’s Emerging Financial Markets: Challenges and Opportunities, edited by J. Barth, J. Tatom, and G. Yago, The Milken Institute Series on Financial Innovation and Economic Growth, New York: Springer, 3-72.
Bekaert, G., C. Harvey, and C. Lundblad (2005). “Does Financial Liberalization Spur Economic Growth,” Journal of Financial Economics 77, 3-55.
Quinn, D. and A. Toyoda (2008). “Does Capital Account Liberalization Lead to EconomicGrowth?” Review of Financial Studies 2, 1403-1449.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download