Market Activity As of 08 Jul 2010 Share Volume | 66,958,835 Turnover | 3,274,201,660.50 Market | CLOSED  ASI | 4,521.40 | 50.62 | 1.13% MPI | 5,114.01 | 80.60 | 1.60% | |||||||||||
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Thursday, July 8, 2010
Stock market
Tuesday, January 5, 2010
Bond Market
The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds. As of 2008, the size of the international bond market is an estimated $67.0 trillion, of which the size of the outstanding
early all of the $923 billion average daily trading volume (as of early 2007) in the U.S. bond market takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges.
References to the "bond market" usually refer to the government bond market, because of its size, liquidity, lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve.
Market Structure
Bond markets in most countries remain decentralized and lack common exchanges like stock, future and commodity markets. This has occurred, in part, because no two bond issues are exactly alike, and the number of different securities outstanding is far larger.
However, the New York Stock Exchange (NYSE) is the largest centralized bond market, representing mostly corporate bonds. The NYSE migrated from the Automated Bond System (ABS) to the NYSE Bonds trading system in April 2007 and expects the number of traded issues to increase from 1000 to 6000.
Besides other causes, the decentralized market structure of the corporate and municipal bond markets, as distinguished from the stock market structure, results in higher transaction costs and less liquidity. A study performed by Profs Harris and Piwowar in 2004, Secondary Trading Costs in the Municipal Bond Market, reached the following conclusions: "Municipal bond trades are also substantially more expensive than similar sized equity trades. We attribute these results to the lack of price transparency in the bond markets. Additional cross-sectional analyses show that bond trading costs decrease with credit quality and increase with instrument complexity, time to maturity, and time since issuance." "Our results show that municipal bond trades are significantly more expensive than equivalent sized equity trades. Effective spreads in municipal bonds average about two percent of price for retail size trades of 20,000 dollars and about one percent for institutional trade size trades of 200,000 dollars”.
source - Wikipidia
source - Wikipidia
Bond Market
The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds. As of 2008, the size of the international bond market is an estimated $67.0 trillion, of which the size of the outstanding
early all of the $923 billion average daily trading volume (as of early 2007) in the U.S. bond market takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges.
References to the "bond market" usually refer to the government bond market, because of its size, liquidity, lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve.
Market Structure
Bond markets in most countries remain decentralized and lack common exchanges like stock, future and commodity markets. This has occurred, in part, because no two bond issues are exactly alike, and the number of different securities outstanding is far larger.
However, the New York Stock Exchange (NYSE) is the largest centralized bond market, representing mostly corporate bonds. The NYSE migrated from the Automated Bond System (ABS) to the NYSE Bonds trading system in April 2007 and expects the number of traded issues to increase from 1000 to 6000.
Besides other causes, the decentralized market structure of the corporate and municipal bond markets, as distinguished from the stock market structure, results in higher transaction costs and less liquidity. A study performed by Profs Harris and Piwowar in 2004, Secondary Trading Costs in the Municipal Bond Market, reached the following conclusions: (1) "Municipal bond trades are also substantially more expensive than similar sized equity trades. We attribute these results to the lack of price transparency in the bond markets. Additional cross-sectional analyses show that bond trading costs decrease with credit quality and increase with instrument complexity, time to maturity, and time since issuance." "Our results show that municipal bond trades are significantly more expensive than equivalent sized equity trades. Effective spreads in municipal bonds average about two percent of price for retail size trades of 20,000 dollars and about one percent for institutional trade size trades of 200,000 dollars”.
Types of Bond Markets
The Securities Industry and Financial Markets Association classifies the broader bond market into five specific bond markets.
§ Corporate
§ Government & agency
§ Municipal
§ Mortgage backed, asset backed, and collateralized debt obligation
§ Funding
Bond Market Participants
Bond market participants are similar to participants in most financial markets and are essentially either buyers (debt issuer) of funds or sellers (institution) of funds and often both.
Participants include:
§ Institutional investors
§ Governments
§ Traders
§ Individuals
Because of the specificity of individual bond issues, and the lack of liquidity in many smaller issues, the majority of outstanding bonds are held by institutions like pension funds, banks and mutual funds. In the
Bond Market Size
Amounts outstanding on the global bond market increased 6% in 2008 to $83 trillion. Domestic bonds accounted for 71% of this and international bonds the remainder. Domestic bond market stocks increased 7% during the year, largely due to an increase in government bonds. The
Federal Agency securities and municipal bonds. In Europe, public sector debt is substantial in
Bond Market Volatility
For market participants who own a bond, collect the coupon and hold it to maturity, market volatility is irrelevant; principal and interest are received according to a pre-determined schedule.
But participants who buy and sell bonds before maturity are exposed to many risks, most importantly changes in interest rates. When interest rates increase, the value of existing bonds fall, since new issues pay a higher yield. Likewise, when interest rates decrease, the value of existing bonds rise, since new issues pay a lower yield. This is the fundamental concept of bond market volatility: changes in bond prices are inverse to changes in interest rates. Fluctuating interest rates are part of a country's monetary policy and bond market volatility is a response to expected monetary policy and economic changes.
Economists' views of economic indicators versus actual released data contribute to market volatility. A tight consensus is generally reflected in bond prices and there is little price movement in the market after the release of "in-line" data. If the economic release differs from the consensus view the market usually undergoes rapid price movement as participants interpret the data. Uncertainty (as measured by a wide consensus) generally brings more volatility before and after an economic release. Economic releases vary in importance and impact depending on where the economy is in the business cycle.
Monday, January 4, 2010
Stock Market
A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
The size of the world stock market was estimated at about $36.6 trillion US at the beginning of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. [3] The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring.). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.
The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The stock market in the United States is NYSE while in Canada, it is theToronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Börse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, and the Bombay Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.
Wednesday, November 4, 2009
The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.
History has shown that the price of shares 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. In fact, 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 the raison d'être of central banks.
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 to an individual buyer or seller that the counterparty could default on the transaction.
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 employment. In this way the financial system contributes to increased prosperity.
Thursday, July 30, 2009
Definition of a stock exchange
A stock exchange provides a liquid, open market for buying selling shares, debentures and warrants of publicly owned companies. The Colombo Stock Exchange (CSE) was established under the companies act No.17 of 1982 and licensed by the Securities and Exchange Commission of
What is a share?
A share represents your ownership in a company. As a part owner you are investing in the future growth of the company.
Distribution by the Company (Bonus Issues)
The company will offer a specified number of free shares to existing share holders at a ratio decided by the Directors of the Company
Liquidity
Shares quoted on a stock market are generally liquid, therefore they can be easily sold and converted to cash
Higher Returns
With very low interest rates offered by most commercial banks in SL, the stock market is seen as a very attractive source for investment which offers investors higher returns specially medium to long term
Collateral
Most banks accept share portfolios as a guarantee against loan facilities
How to get started
To start investing in the stock market you must first open a Central Depository System (CDS) Account thru your Trading company. Opening a CDS account is done free of charge. Once the account is opened you could start trading in the Primary or Secondary markets
Primary Market
In the primary market shares could be subscribed directly from the issuer (Company), who extends an invitation to the public by publishing a document known as the “Offer Document” or the “Prospectus”
Secondary Market
A market in which an investor could either buy or sell shares from or to another investor, subsequent to the original issuance in the primary market.
Is investing in the stock market risky?
There is an element of risk. However you can minimize and manage risk through diversifying strategy
1.Your portfolio can be a mix of equity and debt instruments (i.e. in shares and government corporate debt instruments
2.In the share market you can invest in several sectors. Thereby in an instance when one sector underperform and another very well, you can offset your losses in one sector from the gains you made in the other
3.Within a sector you can invest in several companies. thereby if one company does not do well, your entire investment returns do not suffer as other companies in that sector may perform well
Types of Securities (Shares) Traded at the CSE
1. Ordinary Share (N)
2. Non-Voting Shares (X)
3. Preference Shares (P)
4. Warrants (W)
Benefits of investing in Equity
Capital Gains
This is where the selling price of the share exceeds the purchase price. Capital gains are free of Tax
Dividends
This is when a company decides to payout a portion of its earnings to the shareholders. Some companies declare interim dividends during the company’s financial year
Rights Issue
This is where the company extends an invitation to existing shareholders to purchase the respective company’s shares at specified and discounted rate. This offer is usually in proportion to the number of shares already owned by the investor
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