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Essay / Research Paper Abstract
This 5 page paper considers the way in which emerging markets are different from the stock markets in developed countries. The writer outlines the characteristics and behaviour of the emerging markets. The bibliography cites 5 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEemergm.rtf
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Unformatted sample text from the term paper:
developed markets. If we have a manager that is seeking to use a diversification strategy that builds a fund with forty to fifty different stocks we may argue that although
this approach may be suited to the developed countries, the characteristics of the emerging markets mean that this stagy will not necessarily be as effective and may also have a
different risk profile. This may result in the fund not succeeding in the same way as the developed funds is lower. If we look at the characteristics of the emerging
markets then we can consider why different strategies should be used. One of the reasons that the emerging markets are attracting more attention is due to the greater potential
for higher growth levels. With the measure that are in place to create a modern economy with the ideas of free markets and capitalism, the liberalisation of the markets has
resulted a potentially fast growing economic environment. In the emerging markets there has been the reduction of the role of the state and the privatisation of many state owned industries,
such as telephone companies. This has created more opportunities (Coggan, 2002). The demand for these stocks is high, this also pushes up the market process. When we consider that emerging
markets make up 44% of the global economy, but in the 1990s accounted for a total of two thirds of the global economic growth we can see the attraction and
the potential for growth (Anonymous, 2002). This is a characteristics of most emerging markets, countries as wide ranging as Mexico, Malaysia and Korea.
The problem with this type of growth is that it is short lived. The creation of demand leads to an over exuberance of the market, and the situation will return
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