A share market, equity market, or composite market is a group of financial entities whose prices are connected through a trade system. The term ‘share’ refers to a legal claim upon a firm by one or more of its shareholders. Shares can be issued either publicly (a ‘Dividend’) or privately (a ‘Payment). A Payment is a right, either actual or nominal, to receive payment for an asset, irrespective of its value at the time of issue. The value of a Payment is based on the current value of the shareholders’ shares and divided by the total number of shareholders (commonly, 100).
The main factors driving the share market are: liquidity, price and demand. The liquidity refers to the ease and efficiency of trading; prices refer to the accessibility of shares to buyers. The demand is determined by supply and demand in the secondary market. In the primary market, the main factor driving demand is speculations by traders. However, the process of supply and demand in the secondary market is fairly simple: supply comes from the supply of willing buyers and willing sellers, while demand is driven by current supply and the current demand.
One of the problems in the stock market is that it can be difficult to know what shares are currently being traded. This problem is particularly noticeable during the initial stages of a given company. To overcome this difficulty, financial information services often provide information on the underlying shares, their prices and volumes traded, enabling investors to make informed decisions about investments. There are two main types of financial information services that investors use to assess the health of the share markets:
Retail Investors. There are a number of investment firms that offer discount stock market services to retail investors. These firms match potential clients with traders interested in buying shares. As part of the service, the firms provide daily stock reports and other related information. Retail investors can also hire a broker to handle their transactions and buy and sell shares on their behalf.
Institutional Investors. The biggest players in share markets are banks and other large institutions. They generally control their own buying and selling activities. They use major stock exchanges to identify shares that are suitable for purchase. If a bank chooses to buy shares, it does so through one of its investment banking divisions or one of its treasury departments. Treasury stocks carry less weight in the overall share markets, since they are purchased at more expensive rates and carry more risk.
Other factors affect the health of the share market. Changes in tax laws and the government’s policies can have an impact on the performance of the secondary market. Investors may also be affected by political events, such as elections and major natural disasters. Also, the overall general health of the economy can have an effect on the share prices of certain companies. Finally, the amount of supply and demand in the secondary market can affect the value of shares. Certain types of business are better able to survive the ups and downs of the secondary market than others, which also has an impact on the value of shares for investors.
About Author
