can anyone sum up the difference between mkt liberilization & mkt intergration? what do we need to know about the BRIC’s? what type of potential questions do you think we will see from these sections? There we no end of chapter questions assigned for these readings.
- market gets liberalized . . . . 10000) market gets integrated Differences is in correlations, capital flows…
Market liberilization: moving from goverment holding to private, moving toward to market-driven economy. Intergration: becoming a part of world economy. Key Point: market liberilization doesn’t result in intergration, intergration doesn’t result in liberilizaion.
i thought integration happens after liberalization…
Not necessarily, if a country is liberilized, but they(government policy) still make it hard for outside investor to invest, the country will still be segmented.
WS can you have integration without liberilization? i would think not from your explanation. thanks
Liberalization leads to integration I believe… But it may not be necessary ??
In bold in Stalla: “Financial Liberalization leads to Market Integration”
bigwilly Wrote: ------------------------------------------------------- > In bold in Stalla: “Financial Liberalization leads > to Market Integration” Stalla is my new hero, after Schweser
Yes, you can also have integration (somewhat) without liberiliztion. A company can issue ADR oversee (offer intergration) but it can still not liberilizied its econmy.
a fully liberalized country allows foreign investment without restriction (i think)
bigwilly Wrote: ------------------------------------------------------- > In bold in Stalla: “Financial Liberalization leads > to Market Integration” Agree, I think what I was trying to say was liberalization doesn’t automatically result in market intergration. Government policy still have to be investor friendly for market intergration to happen QUICKER.
that is what i said in my first post. so issuying ADR is a sign of integration or liberalization?
My bad…I guess the bottome line is that if one country is liberalized, I won’t automactially assume it is alos intergrated; or if one country is intergrated, I won’t automatically aussme it is also liberizlied. Issusing ADR oversee will be intergration.
ws Wrote: ------------------------------------------------------- > Not necessarily, if a country is liberilized, but > they(government policy) still make it hard for > outside investor to invest, the country will still > be segmented. can you give an example of this…its still confusing me. would they be considered liberalized if they still had govt policies making it difficult to invest in their country? thanks
Yes they could still be considered liberalized. They may have made ADR’s available but are still a-holes about letting people invest directly in their markets.
i think liberalization pertains to economics, and integration applies to the financial markets.
yeah how can u integtrate if ur not liberal (logically, without reading I think SS17)
from SS 17 Mkts are considered integrated when assets of identical risk command the same expected return irrespective of their domicile. In theory, liberalization should bring about emerging mkt integration with the global capital mkt, and its effects on emerging eq mkts are then clear. Foreign investors will bid up the prices of local stocks with diversification potential while all investors will shun inefficient sectors. overall, the cost of equity capital should go down, which in turn may increse investment and ultimately increase economic welfare.
ws Wrote: ------------------------------------------------------- > My bad…I guess the bottome line is that if one > country is liberalized, I won’t automactially > assume it is alos intergrated; or if one country > is intergrated, I won’t automatically aussme it is > also liberizlied. > > Issusing ADR oversee will be intergration. you see ws, that is the problem with schweser. It is full of sh1t. page 200 v4, second paragraph from the top “An ADR from a country with investment restrictions can be viewed as investment liberalization” That is why i ALWAYS double check schweser. I dont trust it one bit