Financial Market Analysis
TCI's Finest
PPT_HOME.pptxSUSTAINABLE INVESTING AS A CRUCIAL PATH TO COVID-19 RECOVERY
INTRODUCTION
Financial market refers to any place where the sellers and buyers can trade the financial instruments. The financial instruments include the equities , derivatives , bonds and the international currencies.
The financial market provides potential interaction between the people who have the capital to invest and those who are in need of the capital.
Stock market is a market where shares of the publicly quoted companies are exchanged and also it facilitates busing and selling of shares.
Types of stock market
Primary market
The primary market provides a platform for the creation of the securities. New bonds and stock can be sold for the first time in the primary market to the public. IPO (Initial Public Offering) is an example of the primary market. The IPO occurs when the stock from the private company is issued to the public for the first time. It also allows underwriting of shares.
2. Secondary market
It is also called the stock market. It is categorized into Auction market and dealer market. The auction market involves the congregation of the institutions and the individuals in one place where they can sell and buy shares at the prices quoted by each seller or buyer. The dealer market involves connection of the participants via the electronic networks. The dealer in the market can buy or sell shares by holding an inventory of security. The dealers gain profit via the different prices at which the participants will buy or sell shares.
3. OTC market
It is a market where transactions occur over the counter system. It is an unorganized system where there was no physical occurrence of the trading.
Please add example.
Role of stock market
Firstly, raising of capital. The stock market provides a venue where various enterprises meet to trade, buy o sell shares with the aim of raising the capital.
Secondly is the servicing investors. A stock market can also act as an intermediary between small and large investors which enables them to get money outside field of banking institutions. The main objective of the stock exchange is to maximize the return on savings.
The stock market are indicators of health. Stock market can indicate the ups, down trends and the shifts of the domestic economy.
Stock market provides a place for selling and buying of securities. This enables liquidity. Liquidity refers to securities which can be easily converted to cash.
Stock market provides speculation of securities so as to enhance liquidity and the supply of securities.
Stock market provides security of transactions. The stock market allow only the listed securities to be traded together with the names of the of the companies in the trade list. Therefore the companies will trade under strict rules and regulations
Cross listing
Cross listing is where the common shares of the company is listed on different exchange as compared to the original stock exchange and primary. For a company to be cross listed, the company must meet the requirements of the exchange listing.
What are the requirement?
Benefits of the cross listing.
Firstly is the access to capital. Cross listing allows the trading of shares in multiple time zones which enhances liquidity. The increased liquidity by the firm tend to increase the chances of raising the capital by the firm.
Secondly cross listing helps in building the reputation of the firm. Since the cross listing allows multiple exchanges, an emergence of any positive news will always be aired out to international media outlets thus boosting the sales of the company.
Thirdly, cross listing enables companies that are found overseas to build a good reputation with the local residents.
How Circuit Breakers Work
In trading the circuit breaker occurs when there is a decrease in the market prices of stocks. A decrease in the market prices will result to a closure of the trading activities temporarily or for the rest of the day.
Add an example about when and where a circuit breaker occurred in the USA.
Conclusion
The financial market are very vital in this covid 19 period. The stock market enables the firms to revive their production activities since the will be able to access capital either via the primary market or secondary market or over the counter. The market will enable the firm to sell or buy shares in the market. The stock market enables the continuity of the business for a longer period of time.
