This paper summarizes the article “Mapping global capital markets 2011.” The paper will also show how the article relates to the topic. The article asserts that the global capital and financial market suffered adversely from the 2008 financial crisis and global recession (Roxburgh et al., 1). However, the article reckons that the economy survived the economic recession and is now growing courtesy of increased sovereign debt and advancements in developing economies. Indeed, the article notes that the value of the global financial stock including outstanding bonds and loans, cross-border capital flows, and equity market capitalization, rose in 2010 (Roxburgh et al., 1). However, according to a detailed analysis on 75 countries provided in 2011 by McKinsey Global Institute, the recovery of the financial markets varies with geographies and asset classes while risks in the market persist. In fact, the report quotes the growth of the global stock of debt and equity to be $11 trillion in 2010 and asserts that this growth mostly resulted from a rebound in global stock market capitalization (Roxburgh et al., 1).
Conversely, the analysis derives that the initial public offerings persistently migrated to emerging markets. Additionally, the article states that the global debt significantly grew by $5 trillion in 2010 although it varied across regions (Roxburgh et al., 1). Indeed, government bonds, corporate bonds, and bank loans grew considerably while bonds issued by financial institutions and securitized assets recorded declining growth in the same period. Moreover, the on-balance-sheet loans of banks grew by $2.6 trillion in 2010 but the growth varied across regions. The article also records that the growth of cross-border capital flows stood at $4.4 trillion in 2010 (Roxburgh et al., 1). Nevertheless, the report confirms that capital flows to developed countries are the most susceptible to economic changes. Ultimately, the article reckons that foreign direct investment assets and stock of foreign debt securities held by institutional and private investors also recorded significant diversity and growth in 2010 (Roxburgh et al., 1).
Notably, the article relates to the topic, “the global cost, and availability of capital“. The article achieves this by demonstrating how monetary or non-monetary capital provided by a cross-border source to the domestic company offers solutions to a domestic country operating globally. The article draws our attention to the impact of cross-border investments centered on the United States as experienced by other nations within Western Europe (Roxburgh et al., 1). The impact happened because of a surge in cross-border investments that emanated from the introduction of euro in a domestic country operating globally, the robust growth, and complexities in correlation with domestic markets. Ideally, in absence of these factors, cross-border investments by U.S would help many domestic companies operating globally.
In addition, the article notes that the decline of the stock of loans outstanding in Japan reflected deleverage by the domestic corporate sector (Roxburgh et al., 1). At the same time, the article highlights the growth of cross-border capital flows in 2010, which manifests less foreign direct investment and reduced inter-bank lending. Ideally, this may reduce foreign control and pressure on domestic industries thus allowing them to grow. In addition, the article appreciates the growth in the stock of foreign investment assets, which enabled domestic central banks to accumulate huge foreign-exchange reserves (Roxburgh et al., 1). These were significant to the country’s financial stock especially because they were low-risk securities. Indeed, the cross-border capital flows and cross-border investments improved market liquidity and offered high rate of return at reduced financial risk.
Works Cited
Roxburgh, Charles, Susan Lund, and John Piotrowski. “Mapping global capital markets 2011.”McKinsey & Company 2011. Web.