The Stock market today takes a looks at the Introduction on Stock Market, Rewiews and Structures.
The Stock Market of Today is a more Centralised and automated system, This quite different compared to the Stock Market of years back which involves book keeping with a predominant features of cross trading. Perhaps in this present age, we are looking forward for a fully decentralised, fully automated Stock Market structure in the future.
Some people prefer buying low price share otherwise known as
penny stocks in anticipation that the company has a growth potential and if
that happens then the shares of the company will appreciates as the company declares
their profit or loss as the case may be. Some buy low price stock with strong fundamentals
for growth has an investment tailored towards planning for the rainy days or
retirement.
Stocks can be categorized by the country where the company is domiciled. For example, in Nigeria, the Nigerian Breweries Plc are domicile in Nigeria and traded on Nigerian Stock Exchange; Nestlé and Novartis are domiciled in Switzerland and traded on the SIX Swiss Exchange, so they may be considered as part of the Swiss stock market, although the stocks may also be traded on exchanges in other countries, for example, as American depositary receipts (ADRs) on U.S. stock markets. Similarly there are other companies in Nigeria that are listed in both the Nigerian Stock Exchange and the other Stock Exchanges.
The stock market is considered to be highly volatile with
high liquidity hence it is one of the most important ways for companies to
raise money, along with debt markets which are generally more imposing but do
not trade publicly. This allows businesses to be publicly traded, and raise
additional financial capital for expansion by selling shares of ownership of
the company in a public market. The liquidity that an exchange affords the
investors enables their holders to quickly and easily sell securities. This is
an attractive feature of investing in stocks, compared to other less liquid
investments such as property and other immoveable assets.
History has shown that the price of stocks and other assets
is an important part of the dynamics of economic activity, and can influence or
be an indicator of social mood. An economy where the stock market is on the
rise is considered to be an up-and-coming economy. The stock market is often
considered the primary indicator of a country's economic strength and
development.
Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is one of the core mandates of central ba nks.
A currency that is relatively stable tends to trade with
high gaining values against other currencies.
Exchanges also act as the clearinghouse for each
transaction, meaning that they collect and deliver the shares, and guarantee
payment to the seller of a security. This eliminates the risk of building the
misconception as an individual buyer or seller that the counter party could
default on the transaction. The Clearing system has a central security
that controls and monitors outbound (sell) and inbound (buy) transactions. The
money that the buyer brings in is used to settle the seller after other
commissions like brokerage fees and Central Security Clearing System fees among
others. However these fees are relatively small and affordable to encourage more
participation in stock market business.
The smooth functioning of all these activities facilitates
economic growth in that lower costs and enterprise risks promote the production
of goods and services as well as possibly employment. In this way the financial
system is assumed to contribute to increased prosperity, although some
controversy exists as to whether the optimal financial system is bank-based or
market-based.
Recent events such as the Global Financial Crisis and the Stock market crashes have
prompted a heightened degree of scrutiny of the impact of the structure of stock
markets, also (called market microstructure), in particular to the stability of
the financial system and the transmission of systemic risk to National financial security.
