BRICS Flashcards
(6 cards)
Brazil
Main market is the Bovespa Index of 90 stocks which are traded on B3 exchange.
Index is a portfolio of the most traded 80% of stock in the last 12 months. Quarterly revisited.
Bovespa Index is divided into six segments – Bovespa Mais, Bovespa Mais Nivel 2, Novo Mercado, Nivel 1, Nivel 2 and Basic. Each with different requirements,
Minimum free float of 25% for first seven years of listing other than Novo Mercado (15% if trading volume above $25m) and Basic (no specific reg). Only Nivel 2 requires English financial statements.
Russia
Moscow Exchange Group is largest in Russia operating trading in equities, bonds and derivatives (FX, commodities and money markets). Operates central securities depository, National Settlement Depository and the largest clearing provider National Clearing Centre.
Moscow Exchange is the main trading venue for Russian securities and major venue for international trading participants willing to invest in stocks and bonds.
Main market has two sections
Equity capital market – shares depositary receipts, fund share and ETFs. T+2 settlement
Debt Capital Market – Russian Federation Government Bonds (OFZs), corporates, regionals and municipals. T+0 settlement except for OFZs which are T+1.
HMRC has revoked Moscow Stock Exchange status as an RIE following Ukraine
India
Monetary policy set by the MPC of the RBI. Objective of maintaining price stability in the economy. Inflation target of 4% +/- 2%, target set by the government. The tools for doing this are repo rates, OMOs, liquidity ratios and cash reserve ratios.
Seven active exchanges the main of which are BSE and National Stock Exchange.
BSE is the oldest in Asia and has developed India’s capital and retail debt markets. Also includes an equities trading platform for SMEs.
5,300 listings. Benchmark is called the Sensex.
Minimum listing requirements:
* Minimum post-issue capital of 10 crore rupees for IPOs and 3 crore rupees for follow-ons where one crore is 10,000,000
* Minimum issue of 10 crore rupees
* Minimum market cap of 25 crore rupees.
NSE established in 1992 first fully automated, screen-based trading system. RIE in 1993 by SEBI and expanded with time from equities and debt to derivatives and SME specific EMERGE platform which launched in 2012.
NSE created the National Securities Depository Limited. India’s first CSD. Holds and transfers shares electronically and aims o enhance efficiency of settlement.
Benchmark index for NSE is the Nifty 50.
China
Monetary policy is set by the PBOC. This is a dual mandate between maintaining internal and external price stability, whilst also promoting economic growth through monetary policy. The inflation target is 3%, using tools such as OMO, reserve requirement ratio (RRR) and loans to Chinese banks.
The SSE and SZSE are two independent Chinese exchanges.
A-Shares are that of Chinese incorporated companies traded either in Shanghai or Shenzhen. Quoted in Chinese renminbi or yuan. Generally only available to PRC residents and international investors under China qualified foreign institutional investors (QFII)
B-Shares are traded on SSE or SZSE and quoted in USD on SSE and HKD on SZSE. Tradable by non-residents and residents using foreign currency dealing accounts.
H-Share are of companies incorporated in mainland China but traded on the SEHK. Many Chinese companies float on SEHK and one of SSE or SZSE, known as A+H shares. Trade in HKD.
QFII
Anyone who has access to Chinese A-Shares outside of China. Financial institutions meeting strict requirements such as threshold capital requirements, AUM and others as set by the CSRC.
No single QFII can hold more than 10% of any companies A-Shares. QFIIs must not hold more than 30% of A-Shares collectively in any company. To ensure A-Shares remain under domestic shareholders.
RQFII allows foreign investment in China’s bond and equity markets through offshore renminbi accounts.
The QFII quota is $300bn to boost market confidence and make things more convenient for foreign investment in Chinese financial markets
South Africa
Monetary policy set by the MPC of the SARB. Objective is to protect value of the rand and maintain price stability. Inflation target between 3-6% using tools such as controlling repo-rates and credit controls.
Main market is JSE. Africa’s most developed and largest stock exchange.
Primarily trading in financial and mining companies, JSE uses LSE SETS system following 100 years of open outcry.
The market consists of the Main Board and AltX which is the SME high-growth section of the market.
After acquisition of SAFEX in 2001 and BESA in 2009 the JSE offers bonds, equities and derivatives trading.
