What conditions necessary to develop a stock market in an emerging economy?

(a) Dependable law and regulations

The existence of dependable laws and regulations, not exactly from the government but also from the enterprises themselves is a necessary conditions since these all(prenominal) the organizations to compete and cooperate with the oversea and worldwide companies.

(b) Resolution of polity risk

Investor confidence in reliable property right and stable, market-oriented policies be a necessary condition for financial integration and the cultivation of emerging stock markets. Announced market-oriented policies may be reversed, however, and are initially not fully conceivable. We argue that sustained privatization and rest programmes represent a major test of political loyalty to safer private property rights, successful privatization has a significant deed on emerging stock market development by the resolution of policy risk, i.e. the risk of ex post policy changes with redistributive impact on investment returns. The evidence showed the progress in privatization gradually leads to increased confidence.

(c) Promoting healthy financial institutions

Healthy financial institutions particularly banks, is a crucial prerequisite for financial stability. The largest number of crises subdued arise, be it in emerging market economies or industrial countries, from financial institutions overextending themselves when times seem good and then retrenching violently afterwards.



Governance would first benefit from a greater sexual focus on risk-adjusted rates of return, particularly when rewarding traders and recognition officers. The relentless pursuit of shareholder value, without this crucial adjustment, could prove a very dangerous strategy.

(d) Developing worldwide acceptable report and audit beat

It is recommended profession should be is self-regulated through accounting standard board instead of regulate by government, improve the credible of accounting and auditing report up to international accounting arranging (IAS) standards.

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