Capital Markets
This industry encompasses the complex machinery of raising capital, including investment banks that underwrite IPOs and facilitate the trading of long-term debt and equity.
Why it exists
Capital markets exist to raise long-term capital for corporations and governments through equity and debt issuance.
Why it’s necessary
They fund growth, infrastructure, innovation, and balance-sheet restructuring at scale.
Key components
Investment banking
Equity & debt underwriting
Trading & market making
Advisory on mergers, restructurings, and capital allocation
How to evaluate businesses
Deal flow, trading volumes, market share in underwriting, cost discipline, and return on equity through cycles define winners. This is a cyclical, winner-take-most business.
How the industry could be improved
Faster settlement, real-time risk clearing, broader access to capital markets for smaller issuers, and automation of standardized deal processes.