Finance Portfolio Management Essay

Question:

Discuss about the Finance Portfolio Management.

Answer:

Brazilian Stock Market

Brazilian Stock Market, commonly known as BOVESPA, is one of the oldest stock market in the world. BOVESPA, founded on 23rd August, 1890, is situated at Sao Paulo, Brazil. There is a long history of Brazilian Stock Market. The year of 90’s was the time of straggle for the Brazilian Stock Market. The market was losing ground in the world economy due to the lack of protection for shareholders, uncertainty in investment and the lack of technology. There was not proper management and transparency. However, Plano Real was the game changer for the Brazilian Share Market. Plano Real was an initiative taken by the Brazilian Government to revive the share market of Brazil (Hennings and Rocha 2013).

The growth was due to a significant inflow of capital from the foreign market. This is the reason that BOVESPA is the fifth largest bourse in the world from the perspective of the participation from the foreign investors. The main reasons behind this significant participation of foreign investors are the high rate of internal interest and the revitalization initiatives taken by the Government. The percentage investment of foreign investors in July, August and September of 2011 was 33%, 34% and 36%. The growing investment percentages are showing the progress of The Brazilian Share Market (Sum and Wang 2014).

There is a huge role of the Brazilian Share Market in the economic development of the country. First of all, this progress has improved the international image of Brazil to the whole world. On the other hand, the deficit management system has been improved as the Government is able to finance the deficits for much longer period of time with less interest rate. There is a good opportunity of costs reductions and capital expenditures (Janakiraman and Radhakrishnan 2015).

The Brazilian Security Market is regulated by the Securities and Exchange Commission of Brazil, widely known as CVM. The full form of CVM is Commissao de Valores Mobiliarios. CVM has the authority to monitor the stock exchange and securities market as well as the Central Bank. The laws which govern the Brazilian Stock Market is Law no. 10,198 dated 14th February 2001, Law no. 10,303 dated 31st October 2001 and Law no. 10,411 dated 26th February. These laws have all the necessary rules, regulations and descriptions for the smooth running of the share market of Brazil. CVM has many works to regulate the share market of Brazil. CVM continuously monitor the share market to know where development is necessary. CVM is responsible for the efficient functioning of the share market of the Brazil. Protection of investors is another job of CVM (www.cvm.gov.br 2016).

Difference Between ASX and BOVESPA

The function of a share market is same all over the world. However, there are some differences exist due to the change in country. Australian Stock Exchange (ASX) and Brazilian Stock Exchange (BOVESPA) are two best stock exchanges in the world. The differences between these two stock exchanges are discussed below:

The ASX is the ninth largest stock market in the world by market capitalization. The amount of average daily turnover in ASX is $ 4,685 million. S&P/ASX 200 is the most important market index in ASX. The market capitalization amount of ASX is $ 1.6 trillion. The main products and services of ASX is shares, exchange trade options, warrants, options, real estate investment, listed investments and others. The trading currency of Australian Share Market is Australian Dollar (www.asx.com.au 2016).

The BOVESPA or Brazilian Stock Market is the fifth largest stock market in the world by the amount of foreign investments. The capitalization amount of BOVESPA is US $ 1.22 trillion. This significant amount of market capitalization has made BOVESPA the 13 the larger stock market at the end of 2011. There are 381 companies trading in the Brazilian Stock Market. The currency of Brazilian Share Market is Brazilian Real (www.bmfbovespa.com.br 2016).

From the above discussion it is clear that there is some major difference between ASX and BOVESPA. The difference is the raking. ASX is the 9th largest bourse in the world where the BOURSE is the 13th largest bourse in the world. There is also difference in the market capitalization amount. The market capitalization amount in ASX is higher than the BOVESPA. The reason is the condition of economy. The Australian economy is better than the Brazilian Economy. The Brazilian economy went through a very tough time. However, it is commendable that Brazil has recovered from that bad time and today BOVESPA is the 5th largest bourse in terms of the foreign investors.

References

Asx.com.au. (2016). Home - Australian Securities Exchange - ASX. [online] Available at: [Accessed 29 Sep. 2016].

Bmfbovespa.com.br. (2016). BM&FBOVESPA – Securities, Commodities and Futures Exchange. [online] Available at: [Accessed 29 Sep. 2016].

Cvm.gov.br. (2016). HOME. [online] Available at: [Accessed 29 Sep. 2016].

Hennings, K. and Rocha, F.A., 2013. Evolution of Capital Flows to the Brazilian Economy after 2008. Banco Central del Brasil, in?dito.

Janakiraman, S. and Radhakrishnan, S., 2015. Discussion of “The Effects of Corporate Governance and Product Market Competition on Analysts' Forecasts: Evidence from the Brazilian Capital Market”. The International Journal of Accounting, 50(3), pp.340-346.

Sum, V. and Wang, A., 2014. Economic Growth, Stock Market Performance, Economic Growth Uncertainty and Foreign Participation in Local Equity Market: A Cross-Sectional Examination of 63 Countries. Stock Market Performance, Economic Growth Uncertainty and Foreign

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