As with so many investment services and opportunities in the modern era, we often take the importance of global investment services for granted. They impact investors, financial markets, and the wider global economy.

 

There are several factors to consider, such as:-

 

Diversification and risk management

 

Diversification is an integral part of wider risk management, something that is only possible through global investment services. This allows investors to spread their funds across not only different asset classes but also different countries and geographical regions. As well as managing general risk, it also mitigates the poor performance of an individual market, sector, or asset class.

 

Access to global opportunities

 

Even today, with the vast and often complex global supply chains, we sometimes need to look overseas to access a broader range of investment opportunities. Whether this is the alternative investment market, crucial for tax planning, or exposure to emerging markets, with the potential for higher rewards in exchange for higher risks, this allows investors to capitalise on global trends and innovation.

 

Enhanced returns

 

The global economy has never been more connected than today, but individual economies are never truly in line with each other. This may be due to economic conditions, politics, or the stage of development of the country. Consequently, global investment services allow investors to invest in regions/areas of business that may offer attractive long-term returns.

 

Economic integration and growth

 

This is where we begin to dig a little deeper regarding the impact of global investment services on the broader (global) economy. These services facilitate the flow of capital across borders, which promote economic integration and controlled growth. In relation to businesses, global investment services provide a wider net when it comes to funding to support expansion and innovation. The knock-on effect is growing economies, increased employment, and more tax income for governments, which will often increase interest from international investors.

 

Risk mitigation against local shocks

 

Whether you live in a developed or developing country, no regulations or government intervention can truly protect investors against local economic (or political) shocks. Consequently, the ease of access to global investment services allows for the mitigation of risk and, in theory, more stable investment returns in the longer term.

 

Improved market efficiency

 

While pricing and trust are at the heart of any investment market, another important element is liquidity, which is enhanced and improved by investors with access to global investment services. Where there is deep liquidity, this will attract international investors and institutions; further improving liquidity in what can become a self-fulfilling prophecy of more efficient markets.

 

Transfer of new technology

 

Cooperation between international partners, governments and investment markets is critical to the ongoing transfer of new technology. For example, the Singapore authorities have a very close working relationship with their Malaysian neighbours and the Vietnamese government. This has encouraged the free flow of investment funding and the transfer of new technology: the result is a more efficient, more expansive global economy and greater opportunities for international investors.

 

Summary

 

This is just a snapshot of the impact that global investment services have on local investment markets and the wider global economy. They also encourage the introduction of regulatory and best practice standards and sustainable development in areas such as ESG. It's surprising what you find when you look under the surface of what appear to be standard global investment services.

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