Friday, August 17, 2012
"China Hot Stocks" is a popular topic among stock investors in the recent years. There are many areas of differences, as compared to American and European stock markets, need to be understood by prospective investors if they want to participate in China's strong bull run from 2005 after the bear was beaten off.
Color Codes of Price Movement
Color codes for price movements are the direct opposite of the western stock markets. When price movement is positive as compared to the previous day's closing price, the instant price will be labeled in red color. Reversely, if the price moves down as compared to the previous day's closing, the instant price at the specific moment will be in green color.
Shanghai Stock Exchange.
There are 2 boards -A and B shares. Shanghai A stocks are traded in Reminbi while Shanghai B are traded in U.S. Dollars. Due to China currency control policy, local Chinese are limited in holding and trading the U.S. Dollar priced Shanghai B shares. So the locals mainly traded in the A market while foreigners could only trade in the B market. As of January 2008, there are 840 A-share companies listed and 54 B-share counters. You can see that B market is relatively small in size as compared to A market.There are companies which are listed both in the A and B markets.
Shenzhen Stock Exchange.
There are 2 boards -A and B shares. Shenzhen A shares are transacted in Reminbi and Shenzhen B are transacted in Hong Kong Dollars. The locals mainly trade in the A market due to foreign currency control while as foreign entities are restricted to the Hong Kong Dollar priced B shares. As of January 2008, there are 670 stocks listed on Shenzhen A market and only 55 on the B market. B market size is less than 10% of A market.
Hong Kong Stock Exchange - H shares (China companies or China related companies listed in Hong Kong) and Hong Kong companies' stocks are all traded in Hong Kong Dollars. Hong Kong's international exposure to western funding, more established financial and legal systems attracted many China companies' IPO on Hong Kong Stock Exchange, including many China government linked corporations such as PetroChina, Bank of China, and China Mobile, China Shenhua. One key private stock listed on HKSE, in late 2007, is Alibaba.com, an online trading platform for wholesalers by a western-educated Jack Ma.
Taiwan Stock Exchange's index has been gloomy for almost 10 years. The main negative factor is a political issue on China's conflict with Taiwan government and its resultance of one-way drainage of investment flow from Taiwan into China. With the upcoming Taiwan Presidential election in March 2008, a new Nationalist Government could decode the current economic mess on the island and revive the Taiwan stock market confidence. I would not advise any move into the Taiwan stocks until the election result on March 22nd.
What Foreigners Could Buy?
Only Shanghai and Shenzhen B shares, Hong Kong and Taiwan markets are open to foreigners. The Authority is slowly opening up channels through which foreigners could invest indirectly in the A stocks listed in Shanghai and Shenzhen exchanges.
Prices Differentials between A and B shares of the same stock are significant. Real estate developer giant Wangke's A shares, on January 28th 2008, were traded at about 60% higher than its B shares on the Shenzhen Stock Exchange. This means the relative significant investment value on B stock if investors are bullish on this company.
Some Chinese companies are both listed on the China A market and Hong Kong Stock Exchange. Prices Differentials between A and H shares of the same stock e.g, Jiangxi Copper's H shares with a dynamic PE of below 10 (Stock code 358) are only 30% of A shares (Stock code 600362) on the closing day of January 25, 2008. This illustrates the investment value of the H shares and the unbelievable huge gaps between A and H shares.
Buying and Selling
Buying of shares in the A and B markets in Shanghai and Shenzhen markets can only be sold on the next trading day. And there is no "Shorting" allowance for the play. This is very different as compared to Hong Kong market and many western exchanges, where selling of shares could happen the next minute after you buy or shorting the stock.
Price Movement Limits
Price Movements of Chinese stocks on A and B markets are limited to either 5% or 10% per trading day. Stock closed at $10 the previous day is only allowed to move between the lowest $9 to highest $11 limits. These limits do not apply to the 1st trading day upon its IPO. And the above Stock Exchange rule also does not apply in the Hong Kong market.
China Stock Market Trend
The locals are hopeful of a 10-year bull run from 2005. The underlying forces behind the sustaining strength would be the aggressive GDP growth of 10% average of the last 10 years, the global pressures for Chinese currency Reminbi appreciation, the new tax policy which came into effect from January 1st 2008, the successful restructuring of many large-size state-own enterprises, government's push for higher-end manufacturing to improve export values further and the major international sports and business events to be hosted by China in the nest few years such as Beijing Olympics 2008 and Shanghai World Expo 2010.
Kiing is a freelance writer and stock investor in U.S and Asian stock markets [http://www.101stockinvestments.com] He writes for 101StockInvestments.com [http://www.101stockinvestments.com] - a FREE resource center for novice or seasoned market investors. This article could be distributed digitally as long as the website links remain intact.
Thursday, August 16, 2012
The stock market is like a gregarious, uncertain beast - you can never predict which turn it's going to take or which direction it is headed for. Having said that, let us also admit that the stock market is one of the most exciting markets in the world that can make your fortunes if you play it right.
And, if you want to play the stockmarket right, you have to figure out how it ticks. Here then are basics and fundamentals of a stock market that will clue you on:
What Is A Stock Market?
A stock market is a trading place where you can buy and sell stock (shares) issued by a company. Alternatively, you can also trade in several derivative products, which are basically financial instruments in the form of contracts, where the parties to the contract agree to exchange payments based on the value of a share at a future date.
Stock Market Trading Explained
Many individuals and entities trade in the stock market. Small investors, day traders who square up their transactions on the same day, investment/financial companies, banks, hedge funds, individuals with a high net worth, institutions, mutual funds - all are involved in stock market trading.
These individuals and entities place their buy or sell orders through a market intermediary, called the stockbroker. Majority of the transactions are routed through a network of computers that execute orders in a matter of seconds.
Stock Market Strategies
In the stock market, you can buy and sell the stocks you own. Besides this, there are several strategies such as short-selling, which means you do not own the stock, but sell it nevertheless (by borrowing it from your broker at a fee) because you feel its price is going to drop - and when the price does drop, you buy it back. Plus, you can buy or sell stocks at a future date if you trade in the derivatives market. Then, you can also indulge in margin buying, which in simple terms means you borrow money to buy stocks, thereby exposing yourself to debt.
Stock Market Index
The stock market index is a value, determined by the stock exchange authorities, that reflects the market's movement. This value is based on a handful of high-volume and reputed stocks - these are weighed and a number is given to them. This number or value fluctuates according to the movement in the prices of these stocks and this is what indices such as the Dow Jones, the NASDAQ, the S & P (Standard & Poor) are all about.
Methods That Influence Investment Decisions
There are two methods that can influence investment decisions in a stock market: (i) Fundamental analysis is a method, wherein the companies past and current performance is analyzed along with the factors that will affect its future profitability. Medium-long term investors invest on the basis of fundamental analysis. (ii) Technical analysis is another method that studies the correlation of price and volumes over a span of time and then gives a buy or a sell signal on the basis of this correlation.
There, those were basics of the stock market. If you want to trade successfully, then you have to understand how the stock market works, because there is no other way, no other shortcut. Happy trading.
Wednesday, August 15, 2012
Investing in the Market - How StockMarket works?
Investors around the globe are always eager to convert their hard-earned money into an amount that can secure their life in the years to come in the shortest possible time. Very few investment options can give the result that an investor seeks. Stock Market is one of the options where it is possible. The king of all the investment options where it is possible to earn a fortune overnight is Stock Market. Most Investor believes that stock market investing provides them with the scope of the maximum return in the shortest time.
Role of Stock Market for companies
However, Stock market investing is lucrative; a query should strike the mind of an investor before entering the world of a stock trader, i.e. ‘How Stock Market Works?’ Stock Broker or an experienced stock trader can help you a lot in clearing your doubts related to your query. It seems a difficult question, but has a simple answer and can be understood without any confusion. Companies are always looking forward to raise their capital for development purposes to get more profit for the organization. They target minor investors for the purpose and the best place to locate them is stock market. To publicize themselves, companies offer a portion (of the overall share of the concern) to public through stock market.
Role of Stock Market for Investors
For investors, stock market and its day trading are the medium from where they look forward to have transactions, i.e. buy or sell, in the stocks that they feel comfortable with. The process of buying or selling of a stock can be achieved in real-time day trading, online stock market, etc.
By understanding the role of stock market in stocks and a stock trader, it is easy to understand the basic working that is involved in stock market. However, an investor who looks forward for extracting maximum tries to gather more and more knowledge on the subject of ‘stock market’. To gather better knowledge, it is important for learning the terms involved in the world of ‘day trading’, ‘stock broker’, ‘stock trader’, etc. that includes stock quotes & market capitalization.
The most popular of all the terms used in stock market is stock quotes. Stock quotes signify the prices that a stock is transacted in the market. An investor studies the stock quotes regularly through the information available from a stockbroker or another stock trader during the day trading. It helps him in making the best decision in relation to stocks. Stock quotes are controlled by several factors that include economical health, trends in spending & trading and technical or financial report of the company put forward to the investors by the company or experienced stockbroker.
Market capitalization is another term that can ring in your ears while you are involved in a conversation whose subject is related to stock market. The term indicates the overall values of companies or stocks that are offered in stock market. Using a simple formula can do calculation of market capitalization of stocks: Number of surplus share in the market X stock quotes.
Buying and Selling of Stocks
The next step after knowing the basic terminologies is learning the procedures for buying and selling of stocks in day trading or online stock market. Buying of stocks is the procedure that requires an appropriate investment amount from a stock trader. This investment amount is utilized in paying for the total amount of the stocks brought along with the commission or the tax charges involved with the transaction. Investor opts for opening investment account with stockbroker that has firm nearby investor’s location for convenience. However, online stock market has given an option for an online account for investment to a stock trader that allows them to buy without the involvement of a stockbroker. The process that follows the opening of the investment account is funding it for making the purchases. The moment your account receives the apt fund for the purchase, stock buying can be done. The process of selling requires the stock trader to inform their stock broker about the quantity of shares you require to sell and at what stock prices. Online stock market requires the trader to enter the order for sell through their investment account.
Once you understand the proceedings and the working of stock market investing, your success in the field is unstoppable.
Tuesday, August 14, 2012
The stock market is the realm where all businesses survive. In fact all interactions including the buying and selling of stock are done on the stock market, which enables businesses to regulate their profits. However, if you are a beginner in the realm of the stock market, you would figure as a dummy in the stock market jargon. Stock market trading is all about organizing them and living with the risks of stock trading. As a dummy investor, it is necessary that one should know-
- Stock market operations
- The right stocks to invest in
- Risk management and
- Relationship management with the brokers and clients
These are just some of the factors that will enable easy stock market trading. Moreover, guidance for stock market operations can be taken through stock market consultants, who can advise the dummy investors about the right stocks to invest in.
What is a Stock Market?
The stock market is the place where the trading of stocks and bonds takes place. This trading involves the buying and selling of stocks that enable investors to make a profit. In the stock market investors gain information about price fluctuations, Depending on the difference in prices investors can make profit or incur losses. However, not every investor is sure about market conditions. In order to gain better understanding of price fluctuations and the right stocks to be sold at a particular price, the services of a stock broker are essential as he advises about the right time to invest in stocks. If you are a dummy investor, following certain tips about stock market operations will enable you configure your place in the stock market. These tips are as follows-
- Stock quotes - Before investing in any stocks, it is necessary to read the stock quotes as they enable an understanding of what the stocks are and what their price, is.
- Stock brokers - These are the professionals of the stock market who enable investors to have first hand knowledge of the stocks that are to be bought and sold. Moreover the stock broker enables the investor to choose from the stock options that are available to the investor.
- Price control mechanism - Through the buying and selling of stocks the stock market regulates the overall price mechanism, which has an impact on the overall economy of a country. Most stock markets around the world are independent of government control.
How do dummies figure their way through the stock market?
Stock trading is not as hard as it looks. As an amateur you have to make your presence felt on the stock market through which other investors will be able contact you. The following points will enable dummy traders to better knowledge of trading stocks:-
- Choosing a broker- Choosing the right stock broker is essential for you in order to invest in the right stocks.
- Risk management- Try to maximize your profits by investing in stocks that your business exclusively deals in.
- Build a Portfolio- Building a balanced portfolio is absolutely necessary in order to have a good business profile.