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Comparative Analysis of Stock Broker Company by dwb41524

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									Foreign Investment in Local
         Securities

            By
       Sofian Haikal
     FDI                           Portfolio Investment


1. Long term investment         1. Short term investment

2. Profit target (very high)    2. Profit target (relatively low)

3. Specific sectors (tourism,   3. Through stock market or private
    services … etc)                 equity
4. Needs clear regulations,     4. Securities law, settlement system,
   investment law, tax, … etc       abide to international standards




                                                                        2
   FDI                              Portfolio Investment


5. Need long time stability          5. Market depth, volatility, ability
   Political – economic stability       to exit without influencing the
                                        market at large.
6. Involvement in management         6. Usually investors are not
                                        involved in management
                                        (Special cases)
7. Difficult - long procedure        7. Relatively easy procedure


8. Local partners                    8. Local Broker


                                                                        3
      Benefits of Portfolio Investment

  1. Providing liquidity (Primary Market & Secondary Market)

  Syriatel case
          IPO Nov. 2004              Ownership by Nationality Nov. 2007
          7,000,000 Shares                  67,000,000 Shares

Syrians                                Syrians
 28%                                    82.78




                                                             Foreigners
                         Foreigner
                                                               17.22
                          s 72%




                                                                          4
             Benefits of Portfolio investment

         Trading 2005 – 2007
         8,530,356 Shares
         App. $115m
             Buying Volume
                                                          Selling Volum e
                             Syrians                                        Syrians
                              16%                                            20%


                                   Syrians
                                   Abroad
                                    12%                                        Syrians
                                                                               Abroad
                                             Foreigners
Foreigners                                      69%
                                                                                11%
   72%




                                                                                         5
 Benefits of Portfolio Investment

2. Incentive for local companies to go public.

3. Knowledge Transfer through management involvement.

4. Drive for more transparency, adapt international standards.

5. Efficient pricing for local securities.

6. Comparative analysis for the performance of local
companies


                                                                 6
  Risk of Portfolio Investment


1. Aggressive Traders.

2. Not attached to any local company, criteria of
   holding depends only on companies’ performance.

3. Pressure for short term profits, against companies’
   long term strategies.

4. The local market correlated with other markets in
   the regions.

                                                         7
  Recommendations


1. Attract foreign investments in local securities under
   certain trading conditions.

2. Provide exit opportunities (trading mechanism, free
   money transfer).

3. Clear, flexible regulations that responds to the over
   changing needs of the market.

4. Market volatility.

                                                           8
Thank you

            9

								
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