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Stock Exchanges – An Introduction

admin — Tue, 13 Jul 2010 14:49:25 +0000

As a new entrant into the stock market you will keep hearing about the terms NYSE, AMEX and NASDAQ and more of the international ones nowadays like HangSeng or the LSE or even the Luxembourg stock exchange .

These are stock exchanges where the exchange of stocks takes place between the buyers and the sellers. In effect these are the actual stock markets but the term stock market is used in a broader term to signify the overall stock holdings, indices, exchanges and everything else related to stocks.

New York Stock Exchange started in 1792 and is located at the epitome of the US financial icon street called the Wall Street. It is undoubtedly one of the largest exchanges in the country. All the companies aspire to be listed here so there shares can be traded on this exchange but before a company can be listed here they have to complete certain set of criteria in terms of financial strength as well as the industry they operate in.

As a beginner you may think that you can trade in the NYSE, you cannot, so you will either have to be a broker or a route your buy or sell order through a broker. Now if you want to be a broker on the NYSE, you will need to cough a million dollars to become a broker on NYSE or as they say buy seat at the NYSE. These brokers can then take your orders regarding selling or buying a stock.

Similar to NYSE is American stock exchange which is again in the financial district of the country called New York. The American exchange has stocks for trading but also has options for trading. The AMEX can trade smaller companies than traded in NYSE and hence it is attractive to a lot of companies.

NASDAQ is the baby of them all though not in terms of the sheer size of companies listed on it and the full form of NASDAQ is National Association of Securities Dealers Automated Quotations. It began in 1971 and has almost any company you could think of listed there. Historically though it was known for technology companies like Microsoft and Intel and a lot of new technology start ups like to list here. This exchange does not have a physical building and it works a computer network where buyers and sellers meet through computer software and sell or buy stocks.

If you are international investor there are stock exchanges apart from America in other countries which you will keep hearing like the Bombay Stock Exchange, Hong Kong Stock Exchange or Hang Seng, Luxembourg stock Exchange or even the FTSE.

Make sure you enough about the exchange you want to trade on as that can help you decide the initial amounts for investing and the ease of investing.

Nigeria Stock Exchange

admin — Thu, 03 Jun 2010 18:49:21 +0000

Nigeria Stock Exchange was founded in the year 1960 as the Lagos Stock Exchange with 19 securities listed for trading. Today there are 262 securities listed on The Exchange, made up of 11 Government Stocks, 49 Industrial Loan (Debenture/Preference) Stocks and 194 Equity / Ordinary Shares of Companies.
The Nigeria Stock Exchange took on its present name in 1977 as by then the Stock Market already had branches in the most important business centers of the nation. The six branches of The Nigeria Stock Exchange are :

Lagos opened in 1961;
Kaduna opened in 1978;
Port Harcourt opened in 1980;
Kano opened in 1989;
Onitsha opened in February 1990;
Ibadan opened in August 1990;
Abuja opened in October 1999;
Yola opened in April 2002.

Lagos however remained the headquarters of the Nigeria Stock Exchange.
The business of trading in Nigeria stock exchange Market is conducted during the weekdays from 11 o’ clock in the morning to 1 o’ clock in the afternoon local time. The goods, which are kept as security while trading are, corporate bonds, shares and government bonds. The trading of shares and bonds are done by the stock brokers in large halls by shouting out loud or by making phone calls which each branch having its own trading hall. The Nigeria Stock Exchange now uses an Automated Trading System which makes trading easier, faster and safer.

The Nigeria stock exchange was started with a small capital and in the year 1997 the capital went up to a total of about $ 3 billion. Nigeria Stock Exchange has been one of the most successful businesses in Nigeria.
The All-Share Index (AMI) is the stock market index of the Nigeria Stock Exchange which for its calculation uses only common stocks (ordinary shares), was developed in 1984.
Its market capitalisation was 5.12trillion naira at the end of 2006 compared to 2.9trillion the previous year.
Prices of new issues are determined by issuing houses/stockbrokers, while on the secondary market prices are made by stockbrokers only. The market/quote prices, along with the All-Share Index, are published daily in The Stock Exchange Daily Official List, The Nigerian Stock Exchange CAPNET (an intranet facility), The Nigerian Stock Exchange website (www.nigerianstockexchange.com), our stock update page, Newspapers and on the stock market page of the Reuters Electronic Contributor System.
In order to encourage foreign investment in Nigeria, the government has abolished legislation preventing the flow of foreign capital into the country. This has allowed foreign brokers to enlist as dealers on the Nigeria Stock Exchange and investors of any nationality are free to invest. Nigerian companies are also allowed multiple and cross border listings on foreign markets.
In the quest of attaining world standard in stock marketing, Nigeria stock exchange became member of the FIBV or “Federation of International Stock Exchange”. Also with the current fight for fraud and corruption, public trust in the Nigeria stock market has grown tremendously, with about three million individual investors and hundreds of institutional investors (including foreigners who own about 47% of the quoted companies) using the facilities of The Nigeria Stock Exchange. The Nigeria Stock Exchange’s 39-year history is devoid of any fraud, shocks, scandals or insider dealings.
The body that governs the Nigeria Stock Exchange is the Securities and Exchange Commission (SEC).
Clearing, Settlement and Delivery of transactions on The Nigeria Stock Exchange are done electronically by the Central Securities Clearing System Limited (CSCS), a subsidiary of The Nigeria Stock Exchange. The CSCS Limited (“the Clearing House”) was incorporated in 1992 as part of the effort to make the Nigeria stock market more efficient and investor-friendly. Apart from clearing, settlement and delivery, the CSCS Limited offers custodian services.
Charges included in all transactions are a 3% commission on the traded value of shares and a 1% Securities and Exchange Commission fee. Withholding tax on dividend and interest remains at 10%; corporate income tax, 35%, capital gains tax, 10%.
The Nigeria Stock exchange is presently headed by a Director-General in the person of Dr Mrs Ndi Okereke-onyiuke.
Every business has its hurdles, so does stock marketing. We won’t promise you a gold mine, but we assure you of a mine, dig well and you will find gold. The type of gold only stock marketing can guarantee.

Making Money on the Stock Exchange: How Stock Exchanges Work

admin — Mon, 26 Apr 2010 14:49:39 +0000

The London Stock Exchange is a marketplace for buying and selling shares. There are two groups:

Stockbrokers, who buy and sell for you. They arrange the deal and receive commission, which might be 1 % with a minimum amount of perhaps £15.
Market makers, who buy from and sell to you. They get the difference between the buying and selling price the spread (this is usually about 1%).

There is a new trading system, called order driven trading (the old system is called quote driven trading), operating for high value companies SETS (Stock Exchange Electronic Trading System) whereby buyers and sellers are automatically matched. However, deals are still set up by stockbrokers.

Some large companies have set up means to trade in their shares at lower costs than are charged direct by stockbrokers.

In addition to commission, stamp duty of 0.5% is payable on purchases.

Adding these together and you have to achieve a gain of about 2.5% to break even.

The animals

The Stock Exchange is full of nicknames. You have already met stags but there are two more important animals bulls and bears. Bulls are optimistic and believe share prices will rise; bears take the opposite view.

To go with the meat there are chips! Blue chips are shares in big companies thought to be relatively sound, such as BP Amoco and Tesco. Then there are white chips smaller, sound companies.

Share prices

Prices of popular shares are printed in most daily and evening papers and can be found on Ceefax/Teletext and on the Internet.

They are usually grouped into sectors, such as stores, electrical, engineering. Lists of share prices will include some or all of the following:

Yesterday’s closing price: this being the middle market price, halfway between the buying and selling prices.
Yesterday’s increase/decrease, shown as + or the previous day’s price.
Highest and lowest prices in the last 52 weeks.
Market capitalisation total number of shares times current price, a measure of company size.
Gross yield last full year’s dividend before tax as a percentage of the current price.
P/E ratio price divided by earnings (profit before tax) per share, i.e. how many years’ earnings to recover the share price (theoretically the higher the figure the better the potential growth).

Share price indices

Most people have heard of the ‘footsie’. It is the FT/SE (Financial Times/Stock Exchange) 100 index the 100 being the largest 100 companies by market capitalisation.

The other main index is the all share index comprising all the shares quoted on the main exchange. There is also the mid 250, being the next 250 after the top 100, and the recently introduced Techmark index for new technology stocks. There are also indices for the main categories of shares on the London market and for foreign shares Europe, the US, Japan, the Far East.

Settlement

Most transactions are now settled electronically through the Crest system, under which share ownership is registered in the name of a nominee.

The old system using transfer forms and share certificates is still available but may cost more.

Settlement of electronic deals is now made three working days after the transaction date. For certificated dealing it is still ten days.

Alternative investment market

In addition to the main market, there is also AIM, the alternative investment market which deals in shares of companies which are relatively new and small. It is an intermediate step before the main market.

Stock exchange regulations are less onerous than for the main market, but this does not in itself mean more risk for the investor.

Shares quoted on AIM are more volatile, may be difficult to buy and sell due to restricted numbers and are certainly more risky due to the newness and small size of the companies. However, large profits can be made.

OFEX market

This is a market for trading in shares in unquoted companies, that is companies which are not quoted on the main or AIM markets and are therefore much more risky.

Stockbrokers

Some operate on an execution-only basis whereby they just deal in accordance with instructions. If advice is also needed, it will cost more. Deals are usually arranged by telephone or using the Internet.

Stock Exchange

admin — Sat, 03 Apr 2010 14:49:29 +0000

A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities, as well as, other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that bonds are traded. Increasingly, stock exchanges are part of a global market for securities.

History of Stock Exchanges

In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers.

Some stories suggest that the origins of the term “bourse” come from the Latin bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), hung on the front of the house where merchants met.

However, it is more likely that in the late 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse, and in 1309 they institutionalized this until now informal meeting and became the “Bruges Bourse”. The idea spread quickly around Flanders and neighbouring counties and “Bourses” soon opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government securities. In 1351, the Venetian Government outlawed spreading rumors intended to lower the price of government funds. There were people in Pisa, Verona, Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke. Stock Exchange.

The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits – or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. In 1688, the trading of stocks began on a stock exchange in London.

Trading In New York Stock Exchange Market

admin — Wed, 03 Mar 2010 14:49:32 +0000

The NYSE can trace its roots to 1792, however it did not become known as the New York Stock Exchange until 1817 when the organization drafted a constitution. In early times is composed of 5 rooms which were used for trading but today the trading center has expanded to much bigger. It is located in 18 Broad Street, New York City.

The New York Stock Exchange (NYSE), also known as the ‘Big Board’ was founded by a merger of the NYSE and Archipelago Holdings, which is fully electronic, and became known as the New York Stock Exchange Group.
It is the biggest stock exchange in the world in the amount of dollars that flows through it each day and has the second largest in terms of numbers of company listing, exceeded only by NASDAQ.

The global capitalization of the exchange is $2.1 trillion with $1.7 trillion by companies not based in the U.S.It works similar to that of an auction. Every company listed trades in one location. A specialist broker designated by each of the listed companies has the duty of acting as an auctioneer at the company post.

Buyers and sellers of a particular stock come together around a specific post and an auction takes place. This form of trading helps generate a price for stocks that is competitive, efficient and fair for both buyers and sellers. The human interaction and the educated judgment helps determine the difference of the New York Exchange from other stock exchanges that are fully electronic.

NYSY Today

When it comes to how much money is traded at any given day, the New York Stock Exchange is categorized as the largest exchange market in the worldwide scope. It is also regarded as the vanguard in the equities market in terms of technology and investments coming in from around the globe. Each day, the New York Stock Exchange is where the largest companies buy and sell billions of dollars amount of shares.

The New York Stock Exchange comprises of member-brokers who take on the trading of stocks (buying and selling) for clients, which are financially huge companies based in different parts of the world. Together with the value of companies that trade on the New York Stock Exchange, it is estimated to have reach at nearly four trillion dollars. Members of the New York Stock Exchange buy and sell millions of dollars worth of stock for their costumer every single day.

Navigating The Stock Exchange

admin — Wed, 10 Feb 2010 14:49:36 +0000

Nothing can seem quite so intimidating as the stock exchange; a hotbed of wealth and commerce all converging in one place; fortunes won and lost; businesses built; and the economic viability of a nation awaiting the results.

The stock exchange can mean a variety of things for a variety of people. To understand the stock exchange you must understand its role in today’s economy.

To begin with, the stock exchange offers corporations the opportunity to fund their operations and grow their business. The money made from investors who believe in the products and services offered by the business is used to finance growth; profits are passed onto the stock holders in the form of increased stock prices which they can use to realize a profit upon the sale of the stock. This opportunity – to be traded on the public stock market – is only offered to businesses of a certain size. It can mean the difference between viability and failure for a business.

Of course, the bigger picture of all this buying, selling, and growth of corporations is the impact it has on the greater economy. A strong economy is dependent upon a viable and thriving stock exchange and the same can be said for the other way around.

It can be enormously exciting to be involved in a process of this magnitude; to witness first-hand a nation’s financial axis. The stock exchange does not have to be a place of intimidation; rather it should be what it was intended to be – a place of opportunity.

To learn all you need to know about the stock exchange, go online. You’ll find tremendous resources at your disposal that will explain the complexities of the stock exchange while laying the groundwork for your possible participation.

If you decide to become a part of trading on the stock exchange you can either begin with online trading – a safe and minimally risky venture for novices – or see a professional stock broker who can guide you through the stock exchange with ease.

Either way, the stock exchange offers a bevy of opportunities for those looking to do something else with their money than having it sit in a bank account. Explore all your options and you’re sure to find that you’ll be comfortable in no time.

Public Offering (IPO) of CANTV

admin — Mon, 12 Oct 2009 16:59:05 +0000

In this article we wish to comment out the different scenarios proposed in the attempted acquisition of Telecom group of companies, Compania Anonima Nacional Telefonos de Venezuela, CANTV, by its likely buyer, the Venezuelan state itself.

Mergers and Acquisitions (M & A) is a branch of corporate finance beyond the limits of this matter and come to be a discipline in itself and science in its own right. Their role and primary objective is to create synergy, ie not only create value for shareholders but for society. The acquisition or merger with “1″ is not only for achieving 1 + 1 = 2, that would be a perfect failure of the management of F & A, but for the achievement and forging of “3″.

In addition to achieving synergy, M & A activity revolves around the game of power is an activity peculiar to capitalism, ie the concentration of capital and power and, therefore, is a highly predatory activity where, consistently, the strongest wins.

In M & As, both activities operate in a very similar spirit, however, there are different legal implications. In an acquisition, the target company ceases to exist and the acquiring legal personality remains intact. In a merger, mix of both operations and creating a new legal personality. Both databases give way to stock the issuance of new shares. With this we have described a merger of equals.

For their part, many mergers acquisitions are presented as though it was technically an acquisition. Why? By the need to soothe and heal rifts in the process of acquisition, which could present the unpleasant connotation of “winner and loser, and nobody wants to appear to be the loser and absorbed, all parties need to show up as winners. It can also be the case of shareholders of the target company that resist purchase to be acquired for reasons of strategic value or type, then we are in the process always disturbing or making compulsory acquisition.

In the case of group company CANTV (VNT), the Venezuelan state through the national government has decided to make a takeover bid (OPA) of the shares class “A” within the consortium VenWorld, formed mainly by Verizon companies (USA) and Telefonica (Spain) which represent approximately 32% of its total share capital of 926,037,385 shares, which gives it management control of the company. However, this bid should not be classified as taking aggressive even as the VenWorld consortium has not ruled in favor or against the acquisition, so we presume that the group is under evaluation and analysis of supply planted.

There is no reason to believe at this moment, the party bringing or purchasing, you may want also to control the entire remaining shareholding base, represented by shares “C” of pensioners from the same company and stock “D” which both are highly atomized in Caracas (common stock) and the NYSE (ADR’s) and maintained primarily by small investors, but we can not rule out that the Venezuelan government is secretly collecting active in both markets most of these actions . For its part, the Venezuelan State already owns approximately 6% of the total share capital “B” purchased in 1991 during the privatization process.

One possible scenario is VenWorld acceptance of the terms of purchase which are not known at this time. If so, everything would be reduced to negotiating a fair price which may fluctuate around some 2,600 million, equivalent to 2,000 million euros as estimated by the students of Business Valuation Metropolitan University of Caracas.

The other possible scenario would be the consortium’s refusal to sell, which would lead to an interesting situation of struggle for control of CANTV group of companies. The Venezuelan government can not afford to fail in its takeover attempt, then this action is part of a process of nationalization of the country’s strategic enterprises, in order to give effect to a centralized planning model. A shot by decree and expropriation is from my point of view a bad strategy. Venezuela has signed international investment agreements and the action violentaría the basis of these agreements create an unfavorable climate for the country.

For its part, the controlling shareholders in countries affected by a compulsory measure, might try to retaliate with which Venezuela maintains active overseas as is the case of Citgo in the U.S.. In addition, CANTV as any corporation of the free world have protection against aggressive shots known as “poison pills” which are actions which directly harm the attraction that it could represent to the buyer. The simplest of these mechanisms is the decree a special cash dividend, payable by the customer, which can substantially increase the purchase price. The Venezuelan government has more than sufficient cash resources to meet such eventualities, but would represent a kind of moral setback or defeat for a rude businessman with many purchases to be made.

The Asymmetry of Information

admin — Sat, 10 Oct 2009 16:55:12 +0000

The “adverse selection” is a term used in financial economics to designate the process by which a trader makes a wrong decision because of information asymmetries between buyer and seller.

For their part, “information asymmetry” refers to the fact that one party can be better informed than his counter-part. It is, to all practical purposes, impossible to achieve a condition where the masses are uniformly informed about any relevant topic. In this regard, it is assumed that those better informed and better decisions at the expense of the less informed, who in all likelihood suffer losses. However, the uniform and symmetric information is not guaranteed success, let’s see why:

Imagine a situation where two agents have exactly the same information (symmetric in this case), this being true and accurate. A company in the first quarter resulting in 12% increase in earnings and, in reaction to this news, the title goes on the market. In the second quarter the company again reported 12% increase on their earnings but now the company is experiencing a run. What happened? Ah! Simply harmed expectations. Surely it was expected to increase by 20% instead of 12%. Opposite reactions against the same piece of information, uniform and symmetrical. Disconcerting, right? We can still make things more complicated.

The phenomenon can be aggravated stock to the extent that a piece of clear and unambiguous, some people give an interpretation, while another group can give otherwise fairly disparate. For example comes news that Home Depot inventories are rising. For a good part of the public, the news is good because they are convinced that to support increased demand, are piling up goods for sale. For the other part of the public good, this news is fatal, because he thinks they are not selling enough and hence the accumulation of inventory. Who is right? For me the correct answer is that neither the one nor the other is right. Just behind any apparent “good source and good data” hides a veil of ambiguity, that nobody but a few experts get crack.

For the correct interpretation of market data, it takes much more than the information industry generally offers. Among many other mechanisms can quote, if I in particular had key information about some aspect of the market, the first thing is do not tell anyone (asymmetric in this case) and try to take advantage for myself. Why should I give away what is precious to perfect strangers?

Tips in General Stock Exchange

admin — Wed, 15 Jul 2009 03:56:33 +0000

Good afternoon, Mr. Eddy.

I see now, playing the more attractive the stock. If you hear the stories of my friends do, but many speculate that the drop is also more. Yes, I understand the principles of high-risk high-return. Just honest, I am interested in playing their own shares, especially the condition of JCI years of very good if the friend I am, some of which show their stock portfolio performance, which have up to 16% -28% / month. I would like to ask that, what should I prepare to play stock, approximately how many% do, that capital should be allocated for the main stock.
Please gimme your tips.
Thanks

Mitch.
Birmingham

Mitch, it’s clear, to enter the stock exchange, you must be ready mentally, materials and knowledge sufficient. On the percentage of return that your friend, that it is very possible, the problem, if you dare take the risk. Allocation percentage for the money you have to play stock, I return to you. Do you already provide enough money to meet the needs of all routine and suddenly you? If you have, whether you already have enough savings / insurance for your future? Talking about persentas, the relative, depending on how daring you to shoulder the burden of defeat.

Here are a few things that should be avoided in selecting shares. I dare to describe this case because the few times ever mengalaminya, losers in trading, learn from mistakes and of course also the essence of my literature-can literature.
- Do not force for stock trading mood if you’re not good.
- Do not ever against the flow, follow the directions pergerakannya, remember, buy the rumors sell the news (if you want to play short-term). At the time news show, so can not have time to go.
- If you want to play long-term, strengthen the information and fundamental analysis of company stock are used to proceed with a new technical analysis.
- Always buy low-sell high, in fact, many people were afraid to buy when prices go down (fear of going down again), so direct selling price increased slightly, sometimes requiring shareholders for more time to ride.
- Be wise in determining the choice of stock, ask for advice from trusted people.

Do not believe the board with your broker, some brokers do not matter if you hit / loss, which is important for them, you make as many transactions, the more its lot, the more commission they . Ask advice from a good broker colleagues because how are you, to buy shares, you have to go through intermediary brokers.
- Avoid requesting tips from people who claim to doubt credibility-but ngaku already experienced decades.
- Do not buy stocks just because you fanatics with brand / label certain, remember, your main shareholders to seek profit rather than reason fanaticism.
- Discipline, tentukanlah target profit / loss you cut, I as far as one, stock prices also are controlled by experts from the company’s shares concerned, this is who they are assigned to keep the price sahamnya, if drastic price changes occur quickly, surely there is a miss, you obliged to immediately find out.
- Avoid stock information from the filter media such as the Internet in the form of email, bulletin board / forum that is not clear-usulnya home.
Be careful with websites that provide recommendations on certain stocks because of the analisnya analysts may have business interests.
- Do not believe the leaflets, advertisements in the media, brochures, flyer who write a review if stock X dikoleksi feasible. Logically, if profitable, I personally will not be sharing it to other people, it is better to buy their own course.

In the next article I will try to review on a technical analysis to be my favorite so far. This is just sharing it because many people far more experienced and expert in this field.