Investment Market Research Reports, Analysis & Trends
Investments industry in the banking sector comprises of banks, firms and agencies that cover global investment banking and brokerage activities, along with a diverse range of securities services such as investment banking, broker-dealer services, banking and asset management and engagement in proprietary trading, in which they trade their own capital for a profit for various private business related reasons. Basically investment banking activity is defined as trading securities in return of cash or the promotion of securities, and some banks can also deal in mutual funds, hedge funds, pension funds and for members of the public who invest and seek profitable returns. In trading securities for cash is popularly known an market making or facilitating transactions. So, to promote the securities, a large amount of research or underwriting is involved and these two activities are called sell side and buy side. Basically Investments industry categorizes investment banking into two divisions, one is in which investment banks deal with insider or private and confidential information and it can not be shared with the public for various critical reason and the area deals with public information and generally it is shared as stock analysis in which there is enough and substantial data that can be easily shared.
Today's scenario is such that the demand is driven by the global economic activity that results in company M&As or public financing, and the profitability of an investment bank depends entirely on its ability to accurately assess the value of a business transaction and the readiness of the market to buy the attendant debt or equity. Globally, the big players have a natural advantage of large customer transactions, brand value, government assistance and many other beneficial factors and the major customer transactions require firms with substantial financial resources, but small investment banks or small players compete by participating in syndication and operating in regional markets or specialized industries that attract good number of customers who understand the plan and forecast and predict good return.
This industry is highly concentrated and especially in the US with the largest 50 players generating over 90% of the total industry's revenue. Major areas and streams from which the industry earns its revenue are from active trading financial instruments that provide asset management services for wealthy clients, retirement and investment funds, placements of new debt and equity issues with public and private investors, and lastly from fees associated with M&As. This industry's players also buy new debt and equity issues for their own accounts, that act as the market maker and they are active securities and currency traders. About 45% of the US industry's revenue comes from brokerage and securities services and over 30% from trading and lastly 25% from financial planning and asset management.
Investment Industry Current Trends
The investment industry's participants have evolved with time in terms of technologies, processes, policies and overall functionality. The industry's investments in technology itself is an attempt to improve efficiency and lower the processing and administration costs and today's spending and budget planning is much more solid than it was few decades ago. The biggest factor that has positively affected the investment areas is the increased development of online services as it is more convenient, reliable, instant and more secure, but the labor costs still take up a considerable expense share due to the aspect of researches and advices, they remain major activities in the industry.
Typically, investment banks and firms require highly skilled and experienced staff to perform such intricate and critical activities, which means providing higher wages to employees, so globally the growth of the industry seems promising and expanding but the government regulations and regulatory bodies' conditions and market fluctuations remain to be still tackled and dodged according to the situation. Today, the slow global economic growth and fears over high sovereign debt levels and weak consumer confidence have kept business and trading activity below the levels of precision and appropriately successful. Due to this issue, the global demand for industry investment banking and broker-dealer services have come down and decreased the overall performance. But in the next five years, the new regulations in the US and Europe are expected to shape and constrain the industry, so to battle that, investment banks and firms will shift their resources and focus away from conducting risky activities to more stable, fee-based activities and into regions with faster economic growth, in which Asia-Pacific and South America are some of the most interesting and prospective markets for growth and expansion.
Major Investment Industry Players
Major players in the investment industry include HSBC, ICICI, City Goldman Sachs, JP Morgan Chase, Wells Fargo, Morgan Stanley, Barclays, Deutsche Bank, Macquarie Group, Nomura, Fidelity Investments, Northern Trust and UBS Investment Bank.