What is the primary focus of capital markets?

The primary focus of capital markets is on long-term financial assets. Capital markets are platforms for buying and selling securities that have a longer time horizon, typically exceeding one year. These can include stocks, bonds, and other investment vehicles designed to fund long-term projects and investments.

Long-term financing in capital markets allows companies and governments to raise substantial amounts of capital for investment in infrastructure, expansion, and development that require years to yield returns. Investors in these markets typically seek returns over a longer period, reflecting their appetite for risk and potential reward over time. This emphasis on long-term investments differentiates capital markets from other financial markets that may focus more on short-term instruments or transactions.

In contrast, short-term financial assets usually fall under money markets, designed for transactions involving securities that mature in less than one year. Currency exchange pertains to Forex markets and involves the trading of different national currencies, while real estate investments, though potentially long-term, are not a defining feature of capital markets as they typically focus on equity and debt instruments.