CAPITAL MARKETS

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CAPITAL MARKETS

• PRESENTED BY
• ANWAR MISBAH SOUBRA, Phd.

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FINANCIAL MARKETS

• THE PLACE WHERE FINANCIAL CLAIMS AND SERVICES ARE
  TRADED.
• THE MEETING PLACE AMONG BUYERS AND SELLERS.

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MONEY MARKET

• THE FINANCIAL INSTITUTION WHERE MONEY IS
  CHANNELED FROM EXCESS LIQUIDITY ENTITIES TO
  ENTITIES SHORT IN LIQUIDITY ON A SHORT TERM BASIS.

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CAPITAL MARKET

• THE INSTITIUTION WHERE LONG TERM FINANCING AND
  CHANNELING OF FUNDS IS CONCLUDED.

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MONEY

• WHAT ARE THE FUNCTIONS OF MONEY?

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FUNCTIONS OF MONEY

1. STANDARD OF VALUE FOR GOODS AND SERVICES.
2. MEDIUM OF EXCHANGE.
3. STORE OF VALUE.

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MONEY ITSELF IS NOT A COMMODITY AND CANNOT
BE BOUGHT OR SOLD.
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MAJOR SUPPLIERS OF FUNDS IN THE CAPITAL MARKET.

• COMMERCIAL BANKS.
• INSURANCE COMPANIES.
• BUSINESS CORPORATIONS.
• RETREMENT FUNDS.

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MAJOR BORROWERS IN THE CAPITAL MARKET.

1. TREASURY DEPARTMENTS.
2. CORPORATIONS.
3. SECURITIES DEALERS.

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CAPITAL MARKET INSTRUMENTS

1. STOCKS.
2. CORPORATE BONDS.
3. MORTGAGES.
4. GOVERNMENT NOTES AND BONDS.
5. MUNICIPAL BONDS.
6. CONSUMER LOANS.

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MARKET TYPES

1. SPOT MARKET FINANCIAL SERVICES ARE TRADED WITH
   IMMEDIATE DELIVERY.
2. FUTURE MARKET FUTURE DELIVERY TRADING. (1)
3. FORWARD MARKET FUTURE DELIVERY TRADING. (2)
4. OPTION MARKET EXERCISE THE RIGHT TO BUY OR SELL
   IN EXCHANGE FOR AN OPTION PRICE .

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ASSETS TRADED

• SECURITIES.
• METALS.
• COMMODITIES.
• CURRENCIES.
• INDEXES.

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COMMON CHARACTERISTICS

1. CREDIT.
2. SPECULATION.
3. SHORT SALE.

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SHARIA VIEW
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SHARIA DISCUSSIONS

• SPECULATION VS. INVESTMENT.
• SHARES REPRESENT ASSETS AND LIABILITIES (DEBTS).
  
• MARGIN PURCHASES AND LOANS.
• COMMON STOCKS NON-VOTING (MUDARABA), WARRANTS.
• PREFERRED STOCKS GUARANTEE THE PRINCIPAL, FIXED
  RETURN, CUMULATIVE, CALLABLE, CONVERTIBLE.

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• SHORT SELLING SELLING WHAT IS NOT OWNED. OWNING
  WHAT CANNOT BE BORROWED. MORE THAN ONE SALE IN
  ONE CONTRACT.
• OPTIONS PROTECTED INVESTMENT. GAMBLING OR A
  CONTINGENT CONTRACT WITH DOWN PAYMENT?
• INDEX TRADING.

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• FUTURE TRADING VS. DELIVERY.
• 97 NON DELIVERY CONTRACTS.
• CURRENCIES, PRECIOUS METALS.

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REVISIT AND REASSURE THE REAL OBJECTIVE OF THE
CAPITAL MARKET

• CHANNEL SURPLUS LIQUIDITY TO REAL INVESTMENT WITH
  AN ECONOMIC VALUE ADDED.