Share Market

Share Market

The share market, also known as the stock market or equity market, is a bustling hub where investors buy and sell shares of publicly-traded companies. It plays a crucial role in the global economy, allowing individuals and institutions to invest in businesses and participate in their growth. By understanding its functioning, types, and dynamics, investors can make informed decisions and navigate the market with confidence. While risks are inherent, diligent research, diversification, and a long-term perspective can help mitigate them. 

What is a Share Market?  

The share market is a platform where individuals and institutions can buy and sell shares, which represent ownership stakes in publicly-listed companies. Investors purchase shares with the expectation of profiting from the company’s growth and success. In return, they may receive dividends and enjoy capital appreciation. Shares represent ownership stakes in companies, entitling investors to potential dividends and capital appreciation. By investing in shares, individuals can align their financial interests with the growth prospects of various industries and sectors. 

The primary exchanges in the United States are the New York Stock Exchange (NYSE) and the NASDAQ, while Singapore features the Singapore Exchange (SGX). These exchanges act as marketplaces for buyers and sellers to interact and execute transactions. They provide transparency, liquidity, and regulation to ensure fair and efficient trading. 

 

Understanding the Share Market  

To navigate the share market successfully, it is crucial to grasp its fundamental concepts and dynamics. A key aspect of understanding the share market is familiarising oneself with important terms such as stocks, market capitalisation, indices, and sectors. Stocks are units of ownership in a company, while market capitalisation refers to the total value of a company’s outstanding shares. Indices, such as the Straits Times Index, or STI, and the S&P 500, provide a snapshot of the overall market’s performance, representing a basket of selected stocks. 

By comprehending these essential concepts, investors can gain insights into market trends, evaluate investment opportunities, and make informed decisions to maximise their returns 

Types of Share Markets  

The share market encompasses various types that cater to different stages of a company’s lifecycle and investment objectives. Some main types of share market are: 

  1. Primary Market: This is where companies issue shares for the first time through initial public offerings, or IPOs. It allows companies to raise capital by offering shares to the public. Investors in the primary market can subscribe to these newly issued shares at the IPO price.
  2. Secondary Market: Once shares are listed and trading begins, the market becomes the secondary market. This is where investors buy and sell shares amongst themselves based on supply and demand. The secondary market provides liquidity, allowing investors to enter or exit positions as desired.
  3. Main Exchange Market: This type of market includes the major stock exchanges like the NYSE and the SGX. It features large, well-established companies that meet stringent listing requirements. Investors can find a wide range of companies and sectors listed on these exchanges. 

Understanding the different types of share markets allows investors to choose the most suitable avenue for their investment goals and risk tolerance 

 

Workings of the Share Market  

The share market operates through a network of buyers, sellers, intermediaries, and exchanges. Buyers place orders to purchase shares, while sellers offer shares for sale. These orders are facilitated by brokerage firms, which act as intermediaries between investors and the exchanges. When a buyer and seller agree on a price, a trade is executed, and ownership is transferred. The share market operates on the principles of supply and demand, with prices fluctuating based on market sentiment, economic factors, company performance, and other variables. 

The share market functions based on the principles of supply and demand. Share prices fluctuate as a result of various factors, including company performance, economic indicators, market sentiment, and investor expectations. Market participants, including individual investors, institutional investors, and traders, constantly analyse and react to these factors, buying or selling shares accordingly. 

Overall, the working of the share market involves the interaction of buyers, sellers, intermediaries, and exchanges. It is a dynamic and ever-changing landscape driven by market forces and investor behaviour. 

 

Examples of a Share Market  

  1. Singapore Exchange (SGX): SGX is the main stock exchange in Singapore. It was founded in 1999 and is the 15th largest stock exchange in the world by market capitalisation. It features companies from various sectors, including finance, telecommunications, and real estate.
  2. New York Exchange (NYSE): The NYSE, founded in 1792, is the world’s largest stock exchange by market capitalisation. It lists numerous renowned American companies, including Apple, Microsoft, and JP Morgan.
  3. NASDAQ: Established in 1971, Nasdaq specialises in technology and growth-oriented stocks. It is home to industry giants such as Amazon, Facebook, and Google’s parent company, Alphabet. 

Frequently Asked Questions

In the United States, the stock market typically opens at 9:30 am Eastern Time (ET) and closes at 4:00 pm ET, from Monday to Friday. In Singapore, the stock market opens at 9:00 am Singapore Time (SGT) and closes at 5:00 pm SGT, from Monday to Friday. 

 

While investing in the share market carries risks, it is not synonymous with gambling. Investing involves thorough analysis, understanding of market dynamics, and long-term strategies. Investors evaluate company fundamentals, economic conditions, and other relevant factors before making investment decisions. Additionally, numerous investment options are available, including index funds, mutual funds, and exchange-traded funds, or ETFs, which can help mitigate risk and provide diversification. 

Investing in the share market offers the potential for long-term wealth accumulation. Over time, well-performing stocks and diversified portfolios have historically generated attractive returns. Furthermore, investing in shares allows individuals to participate in a company’s growth, support innovation, and contribute to the broader economy. However, it is essential to conduct thorough research, understand personal risk tolerance, and consider investment goals before entering the share market. 

Investing in the share market involves a step-by-step process. First, individuals need to educate themselves about the market, conduct research, and define investment goals. Then, they should open a brokerage account with a reputable firm. After funding the account, investors can analyse stocks, build a diversified portfolio, and execute trades based on their strategies. Regular monitoring and portfolio rebalancing are vital to align with changing market conditions and individual goals. 

Share prices are determined through the interaction of supply and demand in the market. Buyers and sellers collectively establish the price based on their willingness to buy or sell shares at a level. Factors influencing share prices include company performance, economic indicators, market sentiment, and investor expectations. Market participants analyse these factors and engage in buying and selling activities accordingly, influencing the stock’s price. The stock market acts as a facilitator of price discovery, ensuring fair and transparent transactions. 

 

 

Related Terms

    Read the Latest Market Journal

    Weekly Updates 15/4/24 – 19/4/24

    Published on Apr 15, 2024 11 

    This weekly update is designed to help you stay informed and relate economic and company...

    From $50 to $100: Unveiling the Impact of Inflation

    Published on Apr 12, 2024 80 

    In recent years, inflation has become a hot topic, evoking strong emotions as the cost...

    Japan’s Economic Resurgence: Unveiling the Tailwinds Behind Nikkei 225’s Record Leap

    Published on Apr 11, 2024 62 

    Source: eSignal, Intercontinental Exchange, Inc. In the heart of Japan’s economic landscape, the Nikkei 225...

    Weekly Updates 8/4/24 – 12/4/24

    Published on Apr 8, 2024 98 

      This weekly update is designed to help you stay informed and relate economic and...

    What Makes Forex Trading Attractive?

    Published on Apr 2, 2024 179 

    In a world where the click of a button can send goods across oceans and...

    Weekly Updates 1/4/24 – 5/4/24

    Published on Apr 1, 2024 94 

    This weekly update is designed to help you stay informed and relate economic and company...

    How to soar higher with Positive Carry!

    Published on Mar 28, 2024 126 

    As US Fed interest rates are predicted to rise 6 times this year, it’s best...

    Why 2024 Offers A Small Window of Opportunity and How to Position Yourself to Capture It

    Published on Mar 28, 2024 174 

    With the Federal Reserve (FED) finally indicating rate cuts in 2024, we witnessed a significant...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you

    IMPORTANT INFORMATION

    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  

     

    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com