Introduction在线视频

Fast-changing international arena

who rules over finance

Welcome to the course of international finance

With forty-year reform and opening up to the outside world

China has become the mere country in the world

with the entire industry categories

according to the industry classification by the United Nations

the largest manufacturing country

the largest goods-trade country

the largest capital-inflow country

and the largest foreign reserve holder in the global market

China has emerged as the second largest economy in the world

with the annual economic growth rate

of 9.5% on average over 40 years

The world stage tends to have the new characteristics

such as the increasing differentiation among different economies

and game between globalization and reverse-globalization

In this context

the recent global economy is experiencing

the three-low situation

such as low economic growth

low inflation rate and low interest rate as well

In the international setting

why did Argentine peso depreciate by 50.9%

by December 14th 2018

Why did Chinese yuan plunged beyond 7 per dollar

on August 5th 2019

Why has the size and year-on-year growth rate

of the foreign direct investment in the developed countries

and in the world declined consecutively for four years since 2016

Why did new emerging economies

become the major injuring areas of capital flight

How did the trade conflict and poisoning pill clause

affect the balance of payments

as well as internal and external balance in one country

The subject of international finance

will help you answer all these questions case by case

International finance is a discipline

which can be examined from two perspectives

From the perspective of macroeconomics

international finance is closely related

to international economics

It’s in essence the fictitious economic analysis aspect

of international economics

as opposed to international trade

as the physical economic analysis aspect of it

The macroeconomic analysis of international finance

mainly involves three types of management

such as the management of balance of payments

international monetary management

as well as the management of internal and external balance

Firstly

an economy as a special accounting entity

should prepare the international economic accounting statements

such as balance of payments statement

and international investment position

on the basis of double-entry bookkeeping principle

to record its international transaction flows

and its holdings of foreign assets and liabilities as well

The macromeanings of overall balance

and the classical theories of balance of payments

facilitate the understanding of payments imbalance

Secondly

international monetary management

comprises the evolution and reform of international monetary system

the management of the international price of currency

as well as international reserve management

The main focus is the international price of currency

or the relative price ratio of two currencies

known as the exchange rate

The international price quotations of currency

or exchange rate quotations

and the international exchange rate arrangements or regimes

are the bases for the pricing and settlement

of international transactions conducted by one economy

International exchange rate regime

is also the main form of international monetary system

One of the major considerations

in the current international monetary management

is what the initial enactment

of Libra White Paper by Facebook on June 18th 2019

provides us to imagine

the reform of international monetary system

Thirdly

the macroeconomic performance of one economy

is usually indicated by the behaviors

of domestic product market money market

and foreign exchange market

or in brief

by internal and external economic performance

Such performance will be disturbed

by the unexpected internal and external shocks

Under different exchange rate regimes

monetary authorities have different reactions

to the changes in the exchange rate

as a result of the shocks

which in turn affect internal and external balance

For instance

the recent international economic events

such as the interest rate raising by FED

the global monetary easing wave

the forthcoming conclusion

of the Regional Comprehensive Economic Partnership

in 2020 etc

may have different effects

on the internal and external performance

of relevant countries

From the perspective of microeconomics

the practices of international finance

is essentially the international financial management

made by the multinational corporations

involving the exchange exposure management

international investment management

and international financing management

made by multinational corporations

On the one hand

the multinational corporations

usually try to manage three main types

of foreign exchange exposure

including transaction exposure

or operating exposure and translation exposure

These exchange exposures can be managed

with appropriate methods

such as the conduct of foreign exchange transactions

and the use of operational techniques etc

On the other hand

the financial managers of multinational corporations

also need to make international investment and financing decisions

As for international investment decisions

the financial managers should take account of

both international portfolio management

and international capital budgeting management

The objective of the former decision

is to construct an optimal international portfolio

with a minimum risk

The latter decision involves two particular concerns

One is the two perspectives

to examine the feasibility

of the proposed international capital budgeting project

say the parent company viewpoint

and the foreign subsidiary or project viewpoint

another is the international capital budgeting risk as well

Especially

the international investment risk is our main focus

for many recent international economic events in this field

deserves attention

For instance

the United States

the United Kingdom and the European Union

formulated the new criteria

for reviewing the foreign investment in succession

The technology shares

in the United States

plummeted and then

the turning point in U.S. share market arose

The Brexit will make the United Kingdom

lose the privilege of the European financial pass

and thereby boost the changing

in the European financial center

On October 12th 2018

China officially enacted

to implement the formal connection

between London and Shanghai Stock Exchanges

In addition

the restrictions on the investment amount

of QFII and R QFII

were both lifted by China on September 10th 2019

The astonishing four circuit breakers occurred

consecutively in the U.S. stock market

in March 2020

What opportunities and challenges

will the above-mentioned events

bring to the global asset allocation

and the international investment risk management

such as the international diversification

so as to bring more benefits

to international investors

As for international financing decisions

the financial managers should allow for

the availability of international sources of finance

such as international trade finance

international project finance

and international securities finance

Furthermore

they should optimize the international financial structure

to raise the necessary sources of finance

with a minimum international weighted average cost of capital

Now Let’s get close to international finance

to explore the mysteries

of these theories and practices