Glamor Economics

Chapter 179

Chapter 22 Section 8 The booster of economic development - the stock market

The stock market, also known as the secondary market or the secondary market, is the place where stocks are issued and circulated. It can also be said that it refers to the place where issued stocks are bought, sold and transferred.Stock transactions are realized through the stock market.

The stock market can be divided into primary and secondary markets. The primary market is also called the stock issuance market, and the secondary market is also called the stock trading market.A stock is a type of security.In addition to stocks, securities also include national bonds, corporate bonds, real estate mortgage bonds, etc.National bonds appeared earlier and were the first marketable bonds to be put into trading.With the development of the commodity economy, marketable bonds such as stocks gradually appeared later.Therefore, stock trading is only a part of marketable bond trading, and the stock market is only one of many marketable bond markets.At present, there is rarely a single stock market, and the stock market is just a place in the securities market that specializes in stocks.

The stock market is one of the main ways for listed companies to raise funds.With the development of the commodity economy, the scale of the company is getting bigger and bigger, which requires a large amount of long-term capital. However, it is difficult to meet the needs of production development if the company's own capital accumulation is used alone, and funds must be raised from outside.

There are generally three ways for companies to raise long-term capital: one is to borrow from banks; the other is to issue corporate bonds; the third is to issue stocks.The first two methods have higher interest rates and time limits, which not only increase the company's operating costs, but also make it difficult to stabilize the company's capital, so they have great limitations.However, by issuing shares to raise funds, there is no need to repay the principal and interest, and only need to allocate part of the profits to pay dividends.Comparing these three financing methods together, the method of issuing shares is undoubtedly the most economical and beneficial to the company.Therefore, issuing stocks to raise capital has become an important form of developing the economy of large enterprises, and stock trading occupies a very important position in the entire securities trading.

In the stock market, the method and form of transferring stocks for trading is called transaction mode, which is the basic link of stock circulation and trading.There are many types of trading methods in the modern stock circulation market, which can be divided into the following three categories from different perspectives:
1. Bargaining and bidding

From the difference between the buyer and the seller to determine the price, it can be divided into bargaining and bidding.Bargaining is a one-on-one meeting between the buyer and the seller, and a deal is reached through bargaining.It is a commonly used method in over-the-counter transactions.Generally, it is used when the stock cannot be listed on the market, the trading volume is small, confidentiality is required, or commissions are saved.Bidding buying and selling refers to a transaction in which both buyers and sellers are a group composed of several people, and both parties openly conduct two-way competition, that is, the transaction not only has bidding and asking price competition between buyers and sellers, but also exists within the buyer group and seller group. With fierce competition, the final transaction is between the buyer with the highest bid and the seller with the lowest asking price.In this two-way competition, the buyer can freely choose the seller, and the seller can also freely choose the buyer, which makes the transaction more fair and the resulting price is more reasonable.Auction trading is the main way of buying and selling stocks on the stock exchange.

2.direct and indirect transactions
According to the different ways to conclude the transaction, it can be divided into direct transaction and indirect transaction.The direct transaction is a direct negotiation between the buyer and the seller, and the stock is also cleared and delivered by the buyer and the seller, and no intermediary is involved in the entire transaction process.The vast majority of over-the-counter transactions are direct transactions.Indirect trading is a trading method in which the buyer and the seller do not meet and contact directly, but entrust an intermediary to buy and sell stocks.The broker system in the stock exchange is a typical indirect transaction.

3.Spot Trading and Futures Trading
According to different delivery periods, it is divided into spot trading and futures trading.Spot trading means that after the stock transaction is completed, the delivery and liquidation procedures will be handled immediately, and the money and goods will be cleared on the spot.Futures trading is a trading method in which after a stock is traded, the price and quantity specified in the contract are followed by delivery and liquidation after a certain period of time.

The stock market occupies a pivotal position in the modern financial market.The trading status of the stock market can quickly reflect changes in macroeconomic policies, and the stock price index is the most sensitive to the country's economic and financial operating conditions, so the stock market is also known as the barometer or booster of the national economy.

With the deepening of my country's capital market reform, the stock market is gradually becoming standardized and mature, which will play an increasingly important role in improving the efficiency of resource allocation and promoting economic growth.

[links to related words]

The second board market is a concept corresponding to the main board market. It is a stock market for small and medium-sized enterprises, especially innovative enterprises, specially established by many capital markets in the world to promote the development of small and medium-sized innovative enterprises.

Insider trading is the operation and management personnel of listed companies take advantage of their positions or brokerages take advantage of their occupations to conduct illegal stock transactions to obtain huge profits.

(End of this chapter)