Stock and Commodity Markets - Essay Example

With globalisation, MNCs began to explore the markets outside there domestic grounds. Stock and commodities market too are being made attractive by respective governments, which is also resulting in wealth creation for the citizens and companies alike. If used judiciously, 'Stock and commodity trading' greatly helps in tapping resources for developmental projects, welfare schemes and other such nation building exercises. In order to leverage the economies of scale at different locations, such companies try to set up some of their operations at different locations.

Moreover, with the advancement in ICT, global distances have tended to become smaller while the world is gradually being seen as a global village. Bracken (2004) underlines that it was since early 1990s when the term 'Globalization' became a catch phrase as it started entering into all walks of life even in developing economies. Libya doesn't have a well defined stock market as Colonel Muammar Qaddafi thought it against the vision of applied socialism and popular democracy (CountryWatch, 2007).

But now with the emergence of his son Seif al-Islam on the horizon, there are talks of a new vision. Libya has the largest reserve of crude oil, but despite such a great wealth and a population of just about 6 Million the country could not progress much during all these years (The Economist, 2007). A well regulated trading as such helps in stabilizing market prices for both buyers and sellers. For example a farmer growing mango crop can enter into a contract with a juice making company or a retailer prior to the growing season to pre-sell his mango crop at an agreed-upon price.

This way the farmer is also assured of a minimum price for his crop, whatever the circumstances are, in the coming months. On the other hand the juice making company is also assured of a minimum level of supply for the company which helps in preparing long term plans and pricing strategies. Similarly if a listed company requires money for expansion or diversification, the company can tap the stock market for borrowing enough money. The borrowed money in turn earns some interests for the lender, which helps in creating wealth for the lender.

Stock markets provide an opportunity even to individual and smaller investors to lend their money this way and thus they are also able to create wealth. The wealth created this way helps in encouraging the consumer market as demands for goods and other commodities increases subsequently. Therefore, the cycle helps in boosting the morale of investors and financial institutions, which in turn helps the economy of the nation. Examples of fast developing economies like India and China together with well developed markets like US and UK are good examples of the role of stock and commodities markets in nation building.

Middle East and North Africa too have been identified as potential growth oriented zones on account of sweeping reforms in some countries of the region. Except Libya and Syria the European Union has recently concluded bilateral association agreements with all states bordering the Mediterranean (Euromonitor, 2007).Dissertation ObjectivesThe dissertation in general aims to;i. Establish a well studied relationship between the stock market trends, the commodity markets and the economies of nations.

These effects have become of particular significance in view of the fast spreading effects of