Capital Markets

Capital markets are financial markets where long-term debt or Equity-backed Securities are bought and sold. These markets facilitate the raising of Capital by providing a platform for companies and governments to issue Securities to investors. Capital markets can be divided into Primary Markets, where new issues of Securities are sold, and Secondary Markets, where existing Securities are traded among investors.

Examples of Capital markets include:

• Stock Exchanges: Platforms like the New York Stock Exchange (NYSE) and Nasdaq where Stocks are traded.
• Bonds Market: The market where government or corporate Bonds are issued and traded, such as U.S. Treasury Bonds.
• Initial Public Offerings (IPOs): A process where a Private Company offers Shares to the public for the first time, such as the IPO of Facebook in 2012.

Cases illustrating Capital markets include:

• In 2008, during the financial crisis, the Capital markets faced significant turmoil, impacting the issuance of new Securities and the Liquidity of existing ones.
• The rise of tech companies has led to increased activity in Capital markets, with notable IPOs like that of Airbnb in 2020, demonstrating investor demand for Equity in emerging industries.