Private placement refers to an investment fund that is raised from qualified investors in the form of non-public offering and invested in stocks, equity, bonds, futures, options, fund shares and other investment targets (such as art, wine, etc.). ) stipulated in the investment contract, referred to as private equity fund.
The generation and expansion of hot money are caused by many factors:
1. First of all, in the 1970s and 1980s, some countries began to relax financial control and lifted restrictions on capital inflow and outflow, which made it possible to form hot money.
Secondly, the new technological revolution has accelerated the spread of financial information around the world, greatly reduced the cost of international allocation of funds and increased the speed of capital flow.
Thirdly, financial innovations represented by forward foreign exchange, currency swap and interest rate swap, forward interest rate agreement and floating interest rate bills provide new investment varieties and channels for hot money.
These factors have accelerated the globalization of financial markets, greatly increased the total amount of global international capital flows, and the scale and influence of hot money have also increased.
Extended data:
Hot money has the following characteristics:
1, high yield and high risk
Pursuing high returns is the ultimate goal of the hot money movement in the global financial market. Of course, high returns are often accompanied by high risks, so hot money earns high-risk profits. They may have made money in this market and lost money in another market, or they may have made money in another market and lost money in this market, which also gives them the awareness and ability to take high risks.
2. High information and sensitivity
Hot money is the darling of the information age. It is highly sensitive to the economic and financial situation and trend of a country, a region or the world, to the exchange rate difference, interest rate difference and price difference of various financial markets, and to the economic policies of the countries concerned, and can be quickly reflected.
3, high liquidity and short-term
Based on high information and high sensitivity, they can enter quickly when they have money, and they can escape instantly when the risk increases. Show great short-term, even ultra-short-term, fast in and out in a day or a week.
This investment is highly fictitious and speculative.
To say that hot money is a kind of investment funds mainly means that they invest in the global securities market and currency market in order to profit from the price fluctuations of securities and currencies, that is, "taking money to make money", which has a certain lubricating effect on the financial market.
If there is no risk aversion like hot money in the financial market, it is impossible for risk aversion to transfer risks. However, the investment of hot money neither creates jobs nor provides services, which is highly fictitious, speculative and destructive.
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