|
 

  

@
@ 


 
Assistant Professor,
Department of Pharmaceutical Management,
NIPER
 |
 
  

¦ ½    
  
 
¦ Inception of International Bank for Reconstruction and
Development (IBRD)
¦ International Monetary Fund (IMF)
¦ International Trade Organization (Initially GATT and
then conversion to WTO)
¦ Agriculture (later on part and parcel of WTO)
¦ These were first few institutions which connected the
world and had participation from member nations.
 |
 
  
¦ ½ 
 and European Integration (European
Monetary Union, European Common Market, Euro as
a common currency«««)
¦ Emergence of ½ as an Economic Power
(Experience shared by Akio Morita, founder of Sony
Corporation on ³Made in Japan´)
¦ 
    (Erstwhile Federal Republic of
Germany and German Democratic Republic)
¦ Emergence of Oil Petroleum Exporting Countries¶
() Grouping and issue of Petro Dollars in
Middle East.
¦   
 of erstwhile  (formation of
CIS Group)
 |
 
  
¦ Emergence of @ 
¦ Projected growth of    
 (Brazil, Russia,
India and China). (China being the manufacturing
hub and India being the knowledge warehouse)
¦ 
!" 
#$ (Indians as NASA scientists,
Microsoft Employees«.) vs. #"!" 
#$
(Great Indian Middle Class by Pavan K. Varma)
¦   

 
# $   in developed nations
and emergence of MNCs
¦ ³% 
 "    ´ (Thomas Friedman, New York
Times columnist and four-time winner of Pulitzer
Prize)
 |
 
  
¦ 

 
  

¦ Corporate Entities
¦ Stock Exchanges (NYSE, NASDAQ, LSE
etc.)
¦ Credit Rating Agencies (Standard & Poor's,
Moody's¶ Services, Canadian Bond Rating
Agency, etc.)
¦ Entry norms, accounting norms, legal issues,
currency issues, language, time zone
differences, etc.
 |
 
  
¦ The New York Stock Exchange 
& dates back to
1792, when traders met under a fabled buttonwood
tree close to where the Big Board¶s floor still stands.
¦ The '
"
 
$ ($% began trading in its
present form in 1801.
¦ @# "#) bourse is older than either.
¦ Yet for most of their history, stock exchanges ""

*# 
"  #
 %  .
¦ Interest in shares was limited, confined largely to
+ %
"*"  %  +
 % "*" &
"  +    
.
 |
 
  
¦ 1980s:  % $% " 
 " , as
chief inspirations for both privatisation and the spread
of share ownership.
¦ Second, there has been a growing appreciation of the
huge "#
%$ $%  that faces most
countries¶ pension systems.
¦ The old ways of relying on    
 " 
!
!

!
$ both look increasingly
unsatisfactory.
¦ Greater emphasis on * 
"" 
.
¦ Third, almost all investors, almost everywhere, have
come to understand that, in the long run,

%
%
"
 % 
# of sufficiently large returns to
pay for people¶s pensions.
 |
 
  
¦ In @#$, nearly half of all households now own
shares, either directly or through mutual funds, 401(k)
plans or directly managed pension plans.
¦ In @  , the level of share ownership is even
higher.
¦ In Britain, the proportion is a little over one-quarter.
¦ |#
" $ still lag, with less than a fifth of
the population owning shares²but, thanks not least to
privatizations, they have made tremendous strides
from a far lower base.
¦ The number of shareholders in |#
now exceeds
that of trade union members.
¦ Even in ½, despite its long bear market, the stock
exchange claims that around 30m individuals now own
shares directly or indirectly.
 |
 
  
¦   
 has microeconomic effects as well.
¦   

 
* 
  % ,--., by which he
means that venture (or private equity) capital was
freely provided to innovators, especially in the
$%


business, in the knowledge that there was
an early and profitable exit route through an initial
public offering (IPO).
¦ 

+ $
 
" $$
 for a growing
share of all capital flows, so they are helping to
determine the course of exchange rates and the balance
of trade. #$
 
 
"/ ( %*

 #

"/ 
    
 *

 &/ * $

  
" &00&
¦ 
1 
$  (New Economy vs. Old
Economy stocks) and bubble bursts (Dotcom era)
 |
 
  
¦ The world 
 market is evolving rapidly due to
changes in technology, changes in regulations, and
falling barriers to international trade.
¦ The demise of dozens of U.S. stock exchanges.
¦ The
 "   "
# 
 
 in industrial
stocks in the U.S. by aggressively using the then new
$%


of the stock (Similar to the rise of NYSE
is the rise of NSE in India)
¦ The "$ 
  $
##$ 
 $
  (A classic
case of a technology-based shakeout of the U.S.

 

 |
 
  
¦ x  



 

x 
  
 !

¦ Securities Exchange Act of 1934
¦ Securities and Exchange Commission
(Equivalent to SEBI in India)
¦ Regulated Entities: corporate entities, credit
rating agencies, stock exchanges, mutual
funds, venture capitalists,
 |
 
  
¦ Australia (All Ordinaries) or Austria (ATX)
¦ Belgium (Bel 20)
¦ Britain (FTSE 100)
¦ Canada (Toronto Composite)
¦ Denmark (OMXCB)
¦ France (SBF 250) or France (CAC 40)
¦ Germany (DAX)
¦ Italy (S&P / MIB)
¦ Japan (Nikkei 225) or Japan (Topix)
¦ Netherlands (AEX)
¦ Spain (Madrid SE)
¦ Sweden (Affarsvarlden Gen)
¦ Switzerland (Swiss Market)
¦ United States (DJIA) or (S&P 500) or United States (NASDAQ
Comp)
¦ Europe (FTSEurofirst 300) or Euro area (FTSE Euro 100)
¦ World (MSCI)
 % 
¦ The US gross domestic product () is expected to grow at
an average 3.4 per cent in 2006 and 2.9 per cent in 2007.
¦ " * lifted interest rates 17 straight times between
June 2004 and June 2006 to moderate economic growth
¦ ^ " #$$ (One of three major indices tracking US
market) from its 2006 low on June 13 has stretched to six
months.
¦ The 
+ ½
 "  @* (DJIA) advanced 1.1 per
cent to a record 12,445.52 in third week of December.
¦ " Composite Index advanced 0.8 per cent to 2,457.20.
¦ " |   #2
 
$: In October 2006 alone, China
accounted for 41 per cent of the $58.9 billion US trade gap.
Second major concern in this respect is China¶s reluctance to
boost the Î
¦ "  3 Ëeating demand in the US northeast alone burns
about 80 per cent of the nation¶s heating oil.
 
 
¦ The MSCI (Morgan Stanley Capital International) 
4

"() performance in 2006 surpassed that of the MSCI
Emerging Markets to steal the top slot.
¦ Incidentally, %  "( 
 
 ($ "  &
has improved its ranking in the last two years.
¦ The MSCI Emerging Markets Index steadfastly at the second
spot for the past three years.
¦  %  
 

(a) Alliance of European stock market operator ³Euronext´ and

the New York Stock Exchange backed by 98.2 per cent of
shareholders and
(b) Reiteration of opposition of London Stock Exchange Group
Plc, Europe¶s biggest stock exchange to a US $ 5.3 billion
hostile bid from the US rival Nasdaq
 ½ 
¦ Japan is 
 ") # 5 and @) 
$

#
.
¦ Deflation to   

Economy ± A Transition
¦ In November 24, 2006 report of Merrill Lynch & Co.,
it was reported that the *   probably shot up
from 12.3 per cent of disposable income to 13.9 per
cent.
¦ Other major concerns for the economy remain massive
 $ " /  
  
 " "$   %  .
¦ By the second week of December, 2006, ½)
  556 
$ @* gained 0.6 per cent to
16,417.82.
¦ The Japanese index ± 


  $ 
, had
performed best in 2005, turned out to be the worst in
2006 so far.
 #  
¦ *
  # #   added more
money to stock funds in Second week of
December than at any time in seven months.
¦ % 
   
    

(MSCI) Emerging Markets Index tracks 25
developing markets.
¦ The MSCI Emerging Markets Index has rallied
33 per cent since reaching its low for the year
on June 13 as the US Fed stopped raising
interest rates after 17 consecutive increases
and commodities prices rebounded.
 #  
¦ 4 / / " " %, (the so-called
BRICs markets as popularized by 2003 Goldman
Sachs Report, represent nations with the potential to
become dominant economies), have led the advance,
with share indices in each country setting records.
¦ Among country funds, %!  " " attracted
the most buying.
¦ In the second last week of December, 2006 itself, the
investment committee of   (California Public
Employees¶ Retirement System) has voted to allow
the biggest US pension fund (having corpus $225-
billion) to invest in stocks of companies in China,
Russia and other emerging markets on a case-by-case
basis.
 @  
¦ Of the +
 ")
  
# 

/
@ 
  
: the Vietnam¶s Ëo Chi Minh Stock
Index up 150% in 2006, the Shanghai Shenzhen 300
Index up 109 per cent, Ëong Kong¶s Ëang Seng
China Enterprises Index up by 68 per cent and
Indonesia¶s Jakarta Composite Index up by 67 per
cent.
¦ Over the last 12 months, stock markets in % "/
 
 " 7
 have posted impressive gains.
¦ On December 19, 2006, Thailand¶s central bank
imposed stringent restrictions on the Thai baht as it
required banks to lock up 30 per cent of new currency
deposits for a year to curb speculation and the stock
markets in Thailand witnessed the steepest fall (the
SET Index, Thailand¶s benchmark plunged 15 per
cent) in 19 years.
 @  
¦ % 
$  are the second-best performing in
Asia after Vietnam.
¦ The Shanghai Composite, which has almost doubled
in 2006. The index is valued at 34.8 times reported
profit, more than its average in the past year of 24.8
times. It seems to be extremely overbought.
¦ One $ $ " $ 
 in Chinese Market:
¦ Those permitted to purchase them. Chinese residents
must invest through the mainland markets in so-called
A-shares; non-Chinese investors are mostly restricted
to buying Ëong Kong¶s Ë-shares, in Ëong Kong
dollars and the result is discount of Ë-shares to A-
shares. The discount of Ë-shares to A-shares has
narrowed over the past six years from about 90% to
below 30%.
 %
$ # 
¦ Some $
 #
* as reflected in the decision
that several foreign firms and investments groups have
been granted the rights to own limited amounts of A-
shares.
¦ + 
  "  on November 16 to fulfill
its obligations for entry into the WTO, which stipulates
that the country must further open its banking sector to
overseas competition.
¦ A significant development in  #  was that China
produced the two biggest global IPOs in 2006 ± ICBC,
which raised $22 billion and Bank of China, which
raised $11 billion.
 " 
¦ Bombay Stock Exchange¶s 30-stock Sensitive Index
is up 
" 89  $ so far this year and it
touched all-time high of 14,000 marks.
¦ The BSE¶s Sensex has given  * "
 

 
" .5  $ over the past one year, which
is twice the return given by its closest rival, the South
African index.
¦ All other #2
 +
 " 
$ "$ including the US,
the UK, France, Ëong Kong, Singapore, Australia,
Malaysia, Mexico and Japan have given a daily
average return of below 0.1 per cent.
¦ 
* *
  
has been on a gradual decline
over the past few months after surging to as high as
3.25 per cent in June 2006.
 " 
¦ Year 2007, the capital market is all set to witness a surge in
equity offerings (including some of the largest ever given the
fact that 
 86. $
#  ($ "
 
,/6./... $
).
¦ A flood of Indian companies is poised to join '
"
)
@  * * #   @ & in 2007, with more
than 20 listings expected to raise at least 2.5 billion pounds.
This year, a total of 11 Indian listings on AIM raised more
than one billion pounds.
¦ 

 Technologies found a slot in % " 
 ,..
"( and became the first Indian company to get into the
index that represents the largest non-financial domestic and
international securities listed on the Nasdaq Stock Market
based on market capitalization.
¦  #  â In 2006, India has become the second biggest
borrower in Asia Pacific by borrowing over $3.7 billion for
project financing, taking a big jump from its 10th position last
year.
 "" 

¦ Islamic Countries and %% $
# 

$ 
"$  (Interest prohibited)
¦  

 of 1970s and 1980s and
movement of capital from Middle East
Economies to Europe
¦ Composition of 
( * (Dollar vs.
Euro)
 $ *|
 
$ ($%
 |
 
  
¦ Î &  ÎâÎ 
¦ Operates the New York Stock Exchange (the "NYSE")
and NYSE Arca and the Pacific Exchange).
¦ NYSE Group is a " 
*"
 securities
listing, trading and market data products and services.
¦ As of $# :,/ 5..6, the NYSE was home to
approximately 2,672 world-class issuers, (Includes
operating companies, closed-end funds and exchange
traded funds.)
¦ NYSE traces its

,;-5, when 24 New York
City stockbrokers and merchants signed the
Buttonwood Agreement.
 |
 
  
¦ ü


'
¦ When determining Listing Fees, calculations are
made at each level of the schedule up to and
including the last level applicable to the number of
shares being listed.
¦ The total Listing Fee equals the sum of the amounts
calculated at each level of the schedule.
¦ The Listing Fee schedule for equity securities is as
follows:
¦ (  


&

 '  

¦ Up to and including 75 million $0.0048
¦ Over 75 million up to and including 300
mn $0.00375
¦ Over 300 million $0.0019
 |
 
  
¦ '
 



â Aggregate Pre-tax Income for last 3 years
$100MM (Worldwide) $10MM (Domestic) and Minimum Pre-
Tax Income in each of 2 preceding years $25MM (world wide)
and $2MM (all 3 years must be positive)
¦ ^ 

 
  

 


 

  

 





(%  a one-time special charge of $37,500, in
addition to fees calculated according to the Listing Fee schedule.
¦ Listing Fees for the following types of listings are also calculated
under the ü


' :
¦ At the time it first lists, an issuer lists

 #
 $ 

" 
$ or warrants, whether or not common shares are
also listed at that time;
¦ Once listed, an issuer lists "" 
 %
  $ 

*

 " $ ; or
¦ Once listed, an issuer lists  + $ 
 " 
$ or
warrants.
 |
 
  
¦ & 


¦ FTSE (Financial Times ± Footsie)

¦ Dow Jones (USA)
¦ S&P 500 (USA and global)
¦ Nikkei (Japan)
¦ Bovespa (Brazil)
¦ Ëeng Seng (Ëong Kong)
¦ NSE and BSE (India)
 |
 
  
¦ 
*  
¦ A foreign private issuer listing 125 million ADRs
representing ordinary shares as part of a worldwide
500 million share offering, assuming that all 125
million ADRs are issued in the United States, will
pay total Listing Fees of $250,000 as follows:
¦ The special one-time charge is $37,500.
¦ The Listing Fee for the first 75 million ADRs is
calculated at the rate of $0.0048 per ADR.
¦ The Listing Fee for the next 50 million shares is
calculated at the rate of $0.00375 per ADR.
¦ Since Listing Fees on an original listing of the ADRs
are subject to a maximum fee of $250,000 and the
calculated amount exceeds this maximum, the Listing
Fee will be $250,000O
 |
 
  
¦ ^ü   ! 
¦ One of the world¶s oldest stock exchanges and can
trace its history back more than 300 years.
¦ Starting life in the coffee houses of 17th century
London, the Exchange quickly grew to become the
City¶s most important financial institution.
¦ Over the centuries following, the Exchange has
consistently led the way in developing a strong, well-
regulated stock market and today lies at the heart of
the global financial community.
¦ Dominant in Europe (Compared to Frankfurt Stock
Exchange, Deutsche Borse or La Borsa)
 |
 
  
¦ A Aâ The governing Council of the Exchange is
replaced with a Board of Directors drawn from the
Exchange's executive, customer and user base. The
trading name becomes ³The London Stock
Exchange´.
¦ A #â üaunched AIM ± our international market for
growing companies.
¦ A
â SETS (Stock Exchange Electronic Trading
Service) is launched to bring greater speed and
efficiency to the market.
¦
$$$â ^ransfer the role as UK Listing Authority with
ËM Treasury to the $ *$ @ %


(FSA). Shareholders vote to become a public limited

company: London Stock Exchange plc.
 |
 
  
¦ Investors who buy shares in companies quoted on
@  are participating in the world's leading stock
market for smaller growing companies.
¦ @  $
#: From 26 countries and range across
37 market sectors and 90 sub-sectors, providing all
types of investors with a vast range of choice in
seeking out businesses to fit their investment profile.
¦ State of the art technology
¦ AIM is +%

!
+" "  
the London Stock
Exchange.
¦ "   
# are the most sophisticated in the
world, and have a truly global network.
¦ AIM share prices are " 
"

* -./...
#  +
 "+".
 |
 
  
¦ Alternative Investment Market (³@&´) of the
ü    !  affords smaller cap
companies access to the capital markets through a
more streamlined process than an IPO in the United
States (or even the primary trading market (or the
³Official List´) of the ü    ! ).
¦ The  

 #  $
# to interest
investment bankers and analysts as well as the limited
liquidity of small cap companies has hurt or
destroyed the US public markets for small companies.
The advent of Sarbanes-Oxley and other corporate
governance requirements have made it prohibitively
expensive to be a small public company in the US.
¦ Accordingly, #  $
# 

 
"

 $  .
 |
 
  
¦ NASDAQ
¦ The largest U.S.  $ 
$ stock market.
¦ With approximately :/5.. $
#, it lists more
companies and, on average, trades more shares per
day than any other U.S. market.
¦ It is %
#
$
# that are " $
 
 of business, including technology, retail,
communications, financial services, transportation,
media and biotechnology.
¦ @@  % #
#  for trading
NASDAQ-listed stocks.
 |
 
  
¦ ) Î  @ 
 A
$$* ² The Nasdaq Stock
Market, Inc. (NASDAQ: NDAQ) has become
operational as an exchange in NASDAQ-listed
securities, effective today.
¦ An ""  ! 


4 
,
separate from NASD.
¦ NASDAQ plans to become
 
  
($% 
% ($% !  " $  on
October 1, 2006.
¦  
 to a national securities exchange, the
securities of companies that were listed on NASDAQ
and registered under the Securities Exchange Act of
1934 or the Investment Company Act of 1940 have
become registered under Section 12(b) of the
Exchange Act.
 |
 
  
¦ x
@  â"
¦ A merger in 1941 of Standard Statistics and Poor's
Publishing Company traces its roots to 1860 when
Ëenry Varnum Poor published his Ëistory of
Railroads and Canals of the United States.
¦ Mr. Poor was a leader in establishing the financial
information industry on the principle of "the
investor's right to know."
¦ Today, more than 140 years later, Standard & Poor's
is the world's foremost provider of independent credit
ratings, indices, risk evaluation, investment research
and data, and is still delivering on that original
mission.
 |
 
  
¦ Ñ  (

   

¦ Over $1.1 trillion in * #   is directly tied to S&P

indexes and more than $4 trillion is benchmarked to S&P
indices - more than all other index providers combined.
¦ The total amount of " <  " in 2005 was
approximately US$4.7 trillion. (Outstanding debt rated by
S&P globally is approximately US$34 trillion.)
¦ In 2005, S&P Ratings Services published #
 % 6../...
 , including 294,000 new ratings and 260,000 revised
ratings. We have issued ratings on debt securities in more than
100 countries.
¦ % < |
 ,5.. $
* :, #   " 
(# 

;.=
 
 #  $  4 


¦ S&P Equity Research is among % +
 "> " 
*"
of independent investment information, offering fundamental
coverage on over 2,000 stocks
¦ Standard & Poor¶s is the !# 
$
 "# 
$
#
" $
" .
 |
 
  
¦ Standard & Poor's,  "*

 % $|+! Companies
(NYSE:MËP), is the world's foremost provider of financial
market intelligence, including independent credit ratings,
indices, risk evaluation, investment research and data.
¦ With 
(# 
;/6.. #

, including wholly
owned affiliates, located in 5, $
 / Standard & Poor's is
an essential part of the world's financial infrastructure and has
played a leading role for more than 140 years in providing
investors with the independent benchmarks they need to feel
more confident about their investment and financial decisions.
¦ 
""  ,???/ % $|+! 
#   "

 
# 
 *$ 
*" meeting worldwide
needs in the financial services, education and business
information markets through leading brands such as Standard
& Poor's, McGraw-Ëill Education, Business Week and J.D.
Power and Associates.
¦ The Corporation has more than 5-.
$  :? $
 .
Sales in 2005 were $6.0 billion.
 |
 
  
¦ &
 

¦ Global Depository Receipts (GDRs)

¦ American Depository Receipts (ADRs)
¦ Petro Bonds
¦ Eurobonds
¦ Islamic Banking Products
¦ Securitization Instruments
¦ Equity
¦ Derivatives««««««
@

$