Globalization of World Markets

In today’s economy, trading happens more quickly and easily than ever before. The advancement of technology and economic progress in many developing nations has opened up new investment opportunities in markets around the world. Investors are able to trade currencies, foreign equities, and debt, and even invest in the sovereign debt of foreign nations.

Driven by economic, political, and technological changes, national economies have become increasingly interdependent. This process is often described as “globalization.” Companies have aggressively expanded their international operations to become more competitive, satisfy global demand, and reduce production costs. Securities firms have responded in turn by developing a global infrastructure that satisfies companies’ needs for greater access to capital, financial products, and information.

Strong global markets bring together those who have capital to invest and those who need capital, thus enabling economic growth. Efficient global markets also aggregate supply and demand, creating the right conditions for mutually beneficial trading.

The Role of Sovereign Debt

Global markets encompass not only the equity and debt securities of companies, but also of nations. A sovereign bond is a bond issue by a national government. In today’s global marketplace, sovereign bonds are commonly traded and held by foreign investors.

Aside from bonds, global markets include, but are not limited, to the trading of stocks, commodities, futures, options, swaps, and derivatives.

Continue reading about Industry Basics: A Brief History of Investing in Global and Foreign Markets.