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| finance and economy |
The size of the global securities marketor equity market is over US$55 trillion and also
the total derivatives market has been calculable at
regarding $850 trillion at the tip of Dec 2010, twelve times the dimensions of
the global finance and economy. the large size of the worth of securities marketmerely justifies the economic
magnitude and variety of the securities market. The securities markethas been taking part in a
really important role within the finance and economy of a rustic
since the twelfth century and has flourished the worldwide finance and economy
within the twenty first century. nearly each developed, developing and
underdeveloped finance and economy has stock markets handling billions of bucks,
commercialism of stocks of listed firms throughout each business day. The world's
largest stock markets area unit within
the u. s., uk, Japan, India, China,
Germany, France, Asian country and also the Kingdom of The Netherlands.
The securities marketis one in every of the foremost
vital sources for firms to boost cash as "share capital" from people and
establishments. this permits businesses to be in public listed, or raise
further money capital for equalization, modernising, reconstruction or growth
(BMRE) by commerce shares of possession of the corporate in a very public market. this can be a sexy feature of
finance in stocks, compared to different, less liquid investments like assets.
Some firms actively increase liquidity by commercialism in their own shares. A securities marketprovides a central location for
investors to return along to shop for and sell shares in firms. These
transactions occur for listed firms that need to create public announcements of
profit, loss and revenue figures. The people United Nations agency own shares
of those firms area unit its shareholders and that they area unit entitled to a
yearly dividend set by the corporate. The securities
markethas 2 main segments - the first market and also the secondary market. New problems with shares in a
very company, or initial public offerings (IPOs), area unit forbidden within
the primary market, whereas existing
shares are often bought or sold within
the secondary market. Most of the
daily commercialism volume comes from the secondary market.
A stable securities marketindicates healthy commercialism
activity and strength within the country's finance and economy. economic
process of stocks and different securities area unit indicators or predictors
to the extent of economic process. The performance of the securities marketcan even be seen as a measuring
system of public sentiment, and conversely, the overall perception of investors
regarding the finance and economy can even influence the securities marketconsiderably. A fall available
costs indicates pessimism among investors associate degreed an expectation of
subdued industrial activity within the close to future. Any uncertainty within
the country, like associate degree at hand amendment or deviation within the
policy and strategy of the govt., financial organization and different
statutory bodies, political instability, can even subdue costs within the securities market. In fact, the securities marketis commonly thought-about the
first indicator of a country's economic strength and development. Rising share
costs, for example, tend to be related to increased business investment and vice-versa. Share
costs additionally have an effect on the wealth of households and their
consumption. Therefore, central banks tend to stay an eye fixed on the
management and behavior of the securities
marketand, in general, on the sleek operation of monetary system
functions. money stability is that the final aim of all central banks.
The finance and economy will
profit stupendously from a securities
marketthat's properly regulated, clear, and permits investors to
handily purchase and sell stocks to earn returns. A exchange market fulfils 2 primary purposes: (a)
it encourages public participation in camera business ventures. Entrepreneurs
with sensible business concepts will raise immense amounts of capital by
launching a public issue of the company's shares within the primary market; (b) through the securities marketinvestors get the chance to
share the success of huge establishments that have the experience to try to to
well in their ventures. this can be a universally acceptable distinctive and
economically viable system that paves the approach for finance the idle cash
and tiny to medium size savings of the mass folks within the producing or
business companies; so provides product and services and employment to the finance
and economy.
The securities marketpermits firms to know the market sentiments accurately. Their
future methods and approach area unit usually influenced by the approach their
company activities area unit received by the general public and mirrored in
their share costs. If investors read a management call favorably, then they're
going to wish to shop for shares within the company to require advantage of
expected future success. this may push share costs up. Similarly, the
management can even draw conclusions from falling share costs and align
policies consequently.
Stock Exchanges act because the
clearinghouse for every dealing, which means that they collect and deliver the
shares, and guarantee payment to the vendor of a security. This eliminates the
chance of a personal client or vender that the counterparty may fail the
dealing. in theory, the securities
marketaccelerates economic development and growth by providing a
lift to domestic savings and increasing the number and also the quality of
investment. The securities
marketencourages savings by providing people with a further
money instrument. the higher savings mobilisation might stimulate and increase
the savings rate considerably and improve the finance and economy.
Stock market provides associate degree
avenue for growing firms to boost capital at lower value. additionally, firms
in countries with developed stock markets area unit less captivated with
bank funding, which might scale back the chance of a liquidity crisis and save
funding value to an excellent extent. securities
marketso absolutely and dynamically influences economic process
through encouraging savings amongst the people and providing avenues for
company funding. With a liquid market, the initial investors don't
lose access to their savings for the period of the investment project as a
result of they'll simply and quickly sell their stake within the company.
The securities marketis meant to confirm through the
takeover mechanism that past investments are most expeditiously used. in
theory, the threat of takeover {is expected|is predicted|is associate degreeticipated}
to produce management with an incentive to maximise firm price. The presumption
is that, if management doesn't maximise firm price, another economic agent
might take hold of the firm, replace management and reap the gains from the a
lot of economical firm. Thus, a free market in company management, by
providing money discipline, is predicted to produce the simplest guarantee of
potency within the use of assets. Similarly, the power to impact changes within
the management of listed firms is predicted to confirm that social control
resources area unit used expeditiously.
Efficient stock markets might scale back the prices of
data. they will do thus through the generation and dissemination of firm
specific info that economical stock costs reveal. Stock markets area unit economical if costs
incorporate all out there info. Reducing the prices of exploit info is
predicted to facilitate and improve the acquisition of data regarding
investment opportunities and thereby improves resource allocation. Stock costs
determined in exchanges and different in public out there info might facilitate
capitalist create higher investment choices and thereby guarantee higher
allocation of funds among firms and as a result a better rate of economic
process takes place.
According to the IMF report on
the stock markets within the
underdeveloped and developing countries in Africa and Asia, stock markets are becoming natural event
usually thanks to the unskillfulness, lack of data and experience available market operations. securities marketprovides capital flow within
the finance
and economy so will increase investment opportunities and creates
employment opportunities, that is, it meets the highest priorities of any
government's strategy and coming up with. securities
marketof any country wants proactive supports from the govt.,
statutory bodies, financial organization and stock commercialism homes. the
govt. will support by its prudent and economical economic policy, the financial
organization will support by its financial policy et al by taking timely and
corrective steps to boost the securities market.
In the perspective of Asian
country, securities marketplays a
really important role within the Asian country finance and economy like
different developed and developing countries. securities
marketof Asian country coated thirty three per cent of
Bangladesh's gross domestic merchandise (GDP) in 2011, in term of by-product
price of all listed stock stood at fifty per cent of gross domestic product in
Dec 2010. The coverage proportion of Asian country securities marketin gross domestic product is
progressively important and is way on top of that of the many different
countries.
Stock market is termed a "Casio-
market" by some quarters however from the dimensions, magnitude
and variety of the world-wide securities
marketand its multi-fetched positive impact on the finance
and economy of Bangladesh, there are
no chance and scope to prove their views. within the twenty first
century no country will afford to undermine and discourage securities marketactivities and to not realise
the importance of getting robust and stable securities market. If any country will, it'd be
associate degree "economic self-destructive act" killing and
destroying the finance and economy and its growth. so the securities marketof any country should become a sensible, invasive, politically and
economically stable and culturally spirited country.
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