What is Stock Market?

What kind of market place is the stock market ?

sheena Asked on September 29, 2015 in Investment.
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1 Answer(s)

A stock market is the place where publicly held companies issue and trade their shares. It is sometimes referred to as the equity market. This platform is very crucial in a free-market economy in which investors are given a ‘share’ in the public company in exchange for their funds to help expansion or other purposes. As such, small companies could grow very large overnight or vice-versa.

The stock market is naturally a marketplace where companies sell and buy their shares. This is done so that they are able to access more capital and inject them into their businesses and at the same time allow investors the opportunities to own a small (or big) share of the company. The attraction factor for investors is that in owning shares of the company, when the performance improves, then the investors would be able to gain a portion of the profit.

What the stock market actually offer is a type of side income for individuals who deem their daily job income to be not enough. Apart from that it is also used as a separate investment stream for anyone which supposedly is better than that of the conventional investment schemes like fixed deposits and unit thrusts. There are fundamentals to investing in the stock market where this is concerned so the most important term here would be ‘stocks’ and ‘shares’ which basically mean the same thing.

 

The Malaysian Stock Exchange – Bursa Malaysia

Bursa Malaysia generally is the name of the Malaysian Stock Exchange and this is the authority that stipulates the rules, regulations and guidelines in share investments. There are currently more than 1,000 public listed companies in Bursa Malaysia that cut across various industries and sectors. They are either listed in the Securities Main Market or the ACE Market which were created to allow companies to ‘go public’ in order to raise more capital in their business operations.

Such an exercise is common among companies who after starting their businesses find themselves short of fund. If their business shows potential, they will then publicly ‘float’ the company whereby certain shares of the company are sold to the public. This is where IPO happens. IPO or Initial Public Offering is where the company announce intent to list the company and a Prospectus is released to the public that reports everything concerning the company. Once the company is listed, its shares could be traded in the market like any of the other public listed companies. The concept is simple, if you buy a share of a certain company, you are practically owning a part of the company which means you will get a share if the company profits and also bear part of the loses if it does.

haydenl Answered on September 29, 2015.
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