International Equity Markets (slp) - Essay Example

INTERNATIONAL EQUITY MARKETS Stock market performance is fundamental to the general economic performance. Stock market is a market where the various shares of the listed companies are sold and bought. Stock market therefore enables companies obtain capital required for their investment decisions. Poor performance of a stock market as well determines the financial stability of the economy (Schoenfeld, 2010). Countries have therefore put in place regulations to ensure that their stock market performance in tandem, with the country’s development required.

The stock market under consideration is the Canadian stock market. The performance of the stock market has been on the rise since the year 2008. It was in the year 2007 that the performance of the stock market declined (Msci, 2011). The decline is attributed to the economic crisis in the year 2008. Though not an enormous improvement in performance, the Canadian stock market has experienced difficult economic times causing fluctuations in the stock performance. Due to the better performance of the stock market, the gross economic product also improved.

The risk in the Canada stock market is average and investors who are risk averse can have somewhere invest part of their money. Performances of stocks in the energy sector have good returns and are therefore attractive to potential investors. This is because energy is an essential factor of production and therefore the demand is essential (Msci, 2011). The good performances that are posed kin the Canada stock market makes it a place to put my investment. Before settling on the stock to purchase opt the firm whose shares are likely to bring better returns, it is essential that the analysis and performance forecast be made.

If well done, the stock market will be worth investing in. Another reason that makes the investment in the Canada stock attractive is the availability of information that is necessary in making investment decisions (Schoenfeld, 2010). The regulatory authority demands that the investors be provided with the relevant information for investment purposes. Good corporate governance has improved the accountability and disclosure requirements (Schoenfeld, 2010). It is therefore advisable that a scrutiny on the performance of the stock can lead to better returns.

The economic recovery period has seen the US securities realize average returns. However, the fluctuating exchange rates together with the increasing level of unemployment posed a challenge on the securities performance. However much the returns are not very high, a blend of investment with the Canada stocks will result into the risk minimization by having a wide variety of stocks. The economic performance of the two different stock exchanges will be very instrumental in the reduction of the risk problems (Schoenfeld, 2010).

Moreover, US securities are also marketable and can therefore be disposed at good prices. The risk involved in investing in the US securities is as well manageable. The advantage of having such portfolio design is that it will enable the investor spread the risk involved in the investment decision. Again, the portfolio will increase the return, as there is a high likelihood of higher returns. What drives investors in putting their money in other stock market is the search for higher and better performing stocks (Dagys & Mladjenovic, 2010).

It should also be noted that the global listing of the securities in more than one stock exchange would boost the performance. Briefly, the performance of the stock market is of value to investors and their investment portfolio should reflect the risk and return trade off. Factors that can lead to stock market crash or cause shakiness in the stock performance should be mitigated. A country, which fails to ensure a smooth operation of its stock market, will not have their firms make huge returns.

List of References Dagys, A., & Mladjenovic, P. (2010). Stock Investing for Canadians for Dummies. John Wiley & Sons. Msci.com (2011). Morgan Stanley Capital International. May 2011, retrieved from http://www.msci.com/products/indices/ Schoenfeld, S. A. (2010). Active Index Investing: Maximizing Portfolio Performance and Minimizing Risk Through Global Index Strategies. New York: John Wiley and Sons.