Equity markets

• Conclusion
• Definition of terms
• References
Introduction (1)
• The Definition
• Historical background
• Purpose of equity markets
• Equity markets’ indices
Introduction (2)
• The Definition
◦ Equity- a share that represents the owner’s investment in the firm
◦ Equity market - a mechanism that enables the trading of company shares, other securities and derivatives
Introduction (3)
• Historical background
◦ The idea of share ownership goes back to medieval times
◦ The Amsterdam Stock Exchange is the first stock exchange that introduced continuous trade in the early 17th century
◦ International equity market began only in 20th century
Introduction (4)
• Purpose of equity markets
◦ Brings people with money to invest together with people who can put that investment to productive use
◦ One of the most important sources for companies to raise money
◦ An easy and liquid way for people to invest
Equity markets’ indices (1)
• National indices
◦ United States (DAJIA, S&P 500, NAScomp)
◦ UK (FTSE 100)
◦ France (CAC 40)
◦ Germany (DAX)
◦ Canada (S&P TSX)
◦ Japan (Nikkei 225)
• International indices (FTSE EURO 100, MSCI World Index, MSCI EAFE…)
• Emerging markets indices (IFC Global, IFC Investable, MSCI Emerging Markets Global)
Equity markets’ indices (2)
Main instruments
• MAIN INSTRUMENTS
• SHARES AND SHARE ISSUES
• EQUITY – LINK SECURITIES
• EQUITY DERIVATIVES
Main instruments (1)
• Shares and share issues
◦ Ordinary shares
▪ Issued by firms to raise funds
▪ conveys the right of part ownership to the shareholder
◦ Preference shares
▪ Share the right of ownership of the firm with the ordinary shareholder
▪ However it ranks first for payments of dividend
▪ Has no voting right
Main instruments (2)
◦ IPO (Initial Public Offer)
▪ It is a first time offering of shares by a specific firm to the public
▪ Source of generating funds instead of debts
◦ Bonus issues
▪ New shares issued to existing shareholders
▪ Number of shares increases, but the shareholder’s funds do not change
▪ No new capital is raised
◦ Rights issues
▪ Shares are usually sold at slightly...

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