San Jose, California (PRWEB) February 13, 2012
Follow us on LinkedIn Major financial institutions including banks are using securitization as the preferred forms of funding, thus driving up the size of the global securitization sector. Many investors are investing in hedge funds, and specialist Asset-Backed Securities (ABS) funds, leading to the fast growth of the segment in recent years. Growing acceptance of consumer debt and consumer lending of money in the developing regions is boosting the issuance of securities by major financial institutions. Moreover, strong economic growth and growth of mortgage markets in these regions is further driving up the securities sector. The securities industry is extremely competitive and cyclical in nature, resulting in extensive revenue fluctuations in brokerage earnings in tune with transaction volumes in major stock exchanges. Security companies emphasize on value added services, including agency services for mutual funds and unit trusts in an effort to withstand market fluctuations, control operational costs and spread out the income sources. Financial enterprises are required to now align risk management, performance measurement and capital planning activities to make certain that performance measures and capital structure support the overall organizational strategy.
Mortgage-Backed Securities (MBS), now widely known as toxic assets, which brought down the US economy and along with it the world economy, resulting in the long drawn 2007-2009 world recession, is currently witnessing decline. Investors worldwide have cut down their purchases of mortgage-backed debt largely as a result of broken confidence in the integrity of the credit and financial system and the ensuing unwillingness among private financial institutions to support lending. Collateralized debt obligations (CDOs) have lost momentum in the global financial markets, following the massive levels of write-downs at financial institutions during the years 2007 & 2008.
The business environment in the global securities industry although recovering from the impact of the global economic recession still stands threatened by the uncertain economic scenarios in the developed economies. The overshadowing concerns over the European debt crisis continue to remain a major dampener and with uncertainties running high, market participants are bracing for a possible slowdown. Cheap bonds focused on safe spread industries are forecast to witness the maximum uptake among investors. Continuing to lose flavor will be sovereign securities not backed by the full faith of the issuing government, given the lower levels of guarantee and higher risks of fluctuations in value. In 2011, global corporate bond issues fell steeply due to fears of sovereign debt crisis in certain European economies such as Portugal, and Greece, and the resulting flight to safety of investors fuelled a significant increase in cost of borrowing. The increased focus on capital preservation led to a decline in US corporate and junk bond offerings, as well as widening of bond spreads.
Global fund managers have been expanding into emerging markets to boost profits in the face of weaker dollar earnings. Among the BRIC countries comprising Brazil, Russia, India and China, Private Equity (PE) investors consider India and China as ideal destinations for funding opportunities. With strong financial market position in comparison to the Western economies, the Asian currency market is likely to represent a far safer investment haven. In addition to India and China, growth in PE investment is also forecast to grow in Brazil with the scheduled 2014 World Cup poised to create ample opportunities for infrastructural development.
The research report titled Securities Industry: A Global Outlook announced by Global Industry Analysts, Inc., provides a collection of statistical anecdotes, market briefs, and concise summaries of research findings. The report offers a rudimentary overview of the industry, highlights latest trends and demand drivers, in addition to providing statistical insights. Regional markets briefly abstracted and covered include US, Japan, Europe (France, Germany, Italy and United Kingdom) Asia-Pacific (China and India) and Latin America. The report offers a compilation of recent mergers, acquisitions, and strategic corporate developments. Also included is an indexed, easy-to-refer, fact-finder directory listing the addresses, and contact details of companies worldwide.
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