Shares

Programs

What Is Shares ?

Whether you're a seasoned trader or not, chances are you've come across the terms "stock" or "shares" at some point. Perhaps you've heard them mentioned in the news regarding the most actively traded stocks or those of companies experiencing losses. Or maybe you've encountered them in popular culture, such as in Hollywood blockbusters featuring Wall Street and the stock market. While stocks or shares might not be unfamiliar concepts to many, have you ever paused to ponder what they truly represent, how they operate, and more? Stocks represent ownership stakes in a company, divided into shares. Those who possess stocks are referred to as stockholders or shareholders. Owning shares grants stockholders a portion of the company's assets and profits, in proportion to the number of shares held. Stocks are typically traded on stock markets.

Why Do Companies Issue Stocks?

Companies go public and issue stocks in order to raise money to invest in their business and help it grow.

Here are some of the reasons behind why companies might decide to issue shares:

  • * To reduce debt: When companies issue stocks, they effectively mitigate the risk associated with managing debt independently. This is because issuing shares to stakeholders provides a rapid infusion of capital that can be used to alleviate the company's debts.
  • * Increase their accessibility to loans: Companies that issue stocks can enhance their capacity to secure loans in the future. This is because companies receiving funds from stakeholders simultaneously reduce their reliance on borrowing, thereby improving their prospects for obtaining loans in the long term.
  • * To fund expansion: Large businesses can offer stocks to generate capital necessary for funding their business expansion. When a business is appealing to numerous investors, the likelihood of financing profitable expansions through its shares is heightened.

Stock Markets

Stocks are commonly traded on stock exchanges, which serve as marketplaces for the buying and selling of stocks. Stock exchanges monitor the supply and demand for stocks of various corporations, influencing the prices of specific shares. Below are some of the largest stock exchanges and their market capitalization as of December 2021:

  • * New York Stock Exchange - 27.69 trillion U.S. dollars
  • * NASDAQ Stock Exchange - 24.56 trillion U.S. dollars
  • * Shanghai Stock Exchange - 8.15 trillion U.S. dollars
  • * Euronext- 7.33 trillion U.S. dollars
  • * Japan Exchange Group- 6.54 trillion U.S. dollars
  • * Shenzhen Stock Exchange - 6.22 trillion U.S. dollars
  • * Hong Kong Stock Exchange - 5.43 trillion U.S. dollars
  • * London Stock Exchange - 3.8 trillion U.S. dollars

Each exchange has its own list of requirements that corporations must adhere to in order to be listed there. The requirements are usually related to number of shares, market capitalisation and earnings over the past few years.
In order to choose where to list, companies take various factors into account, such as:

  • * Location of the corporation and the exchange.
  • * Type of exchange.
  • * Listing and compliance costs.
  • * Accounting policies to be followed.

Each exchange maintains its distinct set of criteria that corporations must meet to be listed. These requirements typically pertain to the number of shares, market capitalization, and earnings over recent years.
When deciding where to list, companies consider various factors, including: