The Development Of The Stock Market

Stock markets are a central component to the functioning of a capitalist economy. All major economies have national stock markets and many economies have smaller markets as well in order to facilitate trade in small cap stocks, or other specialized securities such as derivatives. Sometimes the performance of a stock market is used in the media as a measure of economic performance, as the market is deemed to be comprised of rational economic actors whose actions are guided by high levels of knowledge. It is important for everybody to understand how stock markets work, and what the benefits and limitations are of using stock markets as a gauge of economic performance.

public offering (IPO). Fundraising recovered from 2002’s nadir of $12 billion, but comparisons to the

(1) According to the case, global IPO activity during the first quarter of 2012 fell to $14.3 billion, which was dramatically down from $46.6 billion during the first quarter of 2011. In addition, we can see in Exhibit 5 that IPO activity in US have dropped sharply since the second quarter of 2011. Number of deals dropped from 383 in the second quarter of 2011 to 157 in the first quarter of 2012.

The state of the economy today is determined by many factors including overseas trade, employment rate, the needs and wants of consumers and namely, the Stock Market. The Stock Market is nothing more than a global network of organised market places where everyday large sums of money are moved across. As of 2013, over $85 trillion AUD (or €60 trillion) are traded in the Stock Market. This amount of money is more than the cost of all goods and services in the entire world economy. However, this is just a simplified statement. In truth, the Stock Market is a highly complicated concept that can be affected by many external problems or cause its own problems such as a rise and fall in stock prices and financial crises.

An Initial Public Offering (IPO) is the first time that the security of a company is offered to the public. This process of equity offering is followed by the companies under the rules and regulations or the guidelines prescribed by Securities Exchange Board of India (SEBI).IPO is the major source of capital for firm to raise their capital for their business Replacement, Expansion, Modernization, Diversification or the host of any other purpose. The pricing of IPOs is one of the most puzzling phenomena in finance. It is tough to predict its prices on listing day of trading in Capital market. It is totally depends upon the Market trend, Issue Price, Issue time, Issue age, Issue size, reputation of Book Running Lead Managers (BRLM) , No. of

　　 paper will encompass the importance of the U.S stock market/stock exchange versus the Chinese stock market/ stock exchange, with a brief introduction about how each stock market/stock exchange came into existence, the importance of each stock market/stock exchange, how the U.S and Chinese manage their stock markets/stock exchange, how corporations are appointed plus the rules and regulations. This will also entail random facts about each stock market/stock exchange. Stock markets are like hitting a royal flush, if the price of your stocks goes up, you win; if it drops, you lose! The stock market, also known as the equity market, is one in which shares are owned by companies and their shareholders. The companies that are on the stock

The stock market has become an essential market playing a vital role in economic prosperity that fostering capital formation and sustaining economic growth. Stock markets are essential for economic growth as they insure the flow of resources to the most productive investment opportunities. Stock markets can be volatile, and the reasons particular stocks rise and fall can be complex. More often than not, stock prices are affected by a number of factors and events, some of which influence stock prices directly and others that do so indirectly.

The stock market has seen a lot of fluctuation during the months of February, March, and beginning of April. This can be noted to the new President in office, Mr. Trump. He has spent a great amount of his life as a businessman, and many investors saw this as a positive omen as to what would happen to the stock market and their investments. In fact, right before the presidential election in November, stock prices and indexes plunged as uncertainty in whether he or Mrs. Clinton would take office in such a close presidential race. After the announcement that there was a projected win for Mr. Trump, these stock prices and indexes that recently plummeted, increase rapidly; even to a price higher than before the uncertainty of the

I. Securities Markets A) Types of Securities Markets 1. The Primary Market a. Going Public: The IPO Process b. The Investment Banker’s Role 2. Secondary Markets B) Organized Securities Exchanges 1. The New York Stock Exchange a. Trading Activity b. Listing Policies 2. The American Stock Exchange 3. Regional Stock Exchanges 4. Options Exchanges 5. Futures Exchanges C) The Over-the-Counter Market 1. New Issues and Secondary Distributions 2. The Role of Dealers 3. Nasdaq 4. Alternative Trading Systems D) General Market Conditions: Bull or Bear Concepts in Review II. Globalization of Securities Markets A) Growing Importance of International Markets B) International Investment

An interesting feature of IPO markets is that they are very sensitive to stock market conditions. IPO volume soars following bull markets and contracts during bear markets. This means that IPO activity exhibits waves in tandem with stock market cycles. The organic link between the level of IPO activity and market conditions is strong. In the US, there were almost 1,000 IPOs during the dot-com boom years of 1999-2000, whereas there were less than 150 IPOs in 2001 after the internet bubble burst and less than 60 IPOs in 2008 when the financial crisis hit.

P., Shen. (2000) showed the relationship between the P/E ratio and the stock market performance. It implied that the high P/E ratio would be the sign of  poor stock market performance, and the P/E ratio would fall back to the long-term average value, as the stocks’ prices falled  in the following years.

Stock markets generally reflect the economic conditions of an economy, Alfaro, Chanda, Kalemli-Ozcan, & Sayek (2004). If an economy is growing then output will be increasing and most firms should be experiencing increased profitability. This higher profit makes the company shares more attractive – because they can give bigger dividends to shareholders. If the economy is forecast to enter into a recession, then stock markets will generally fall. This is because a recession means lower profits, less dividends and even the prospect of firms going bankrupt, which would be bad news for shareholders.

Researches concerning on macro economy and stock markets of established markets have been widely studied in the past. Early studies in this area support the argument that stock market returns are influenced by economic announcements ( Hardouvelis, 1988 ). Additionally, authors such as Levine and Zervos ( 1996 ) have produced significant evidence that stock markets ' returns are influenced by macroeconomic indicators such as Gross Domestic Production ( GDP ), productivity, employment and interest rates.

I compile, through various mediums, information regarding initial public offerings, or IPO’s. The report includes areas such as defining an IPO, the performance of IPO’s, the current market for IPO’s, and the process of buying an IPO. Therefore, the feasibility report is directed at the retail or non-professional investor who may be engaged in purchasing IPO’s. I look to determine if the underlying facts create certainty that these instruments are profitable currently and in the long run. It appears through study that investors have increased their consumption of initial public offerings since the 2007-2008 financial crisis. Many investors believe purchasing IPO’s can create quick realized gains. However, it appears that the performance of these issues has lagged the broader market, which in my opinion should steal zeal from these risky investments. The figures throughout this report should indicate and reaffirm that not all IPOs, whether popular or unpopular, will benefit the professional or non-professional investor. It must be noted that not everything is the same in financial markets and results may vary significantly from this report in a single incident or sample study.

how long does the firm stays invested post the IPO, could be an indicator of the IPO’s long term performance. Often, hasty exits from an investment, also, known as quick-flips, may result into failure of an IPO. The level of Debt-to Equity ratio coupled with the amount of dividends paid by the PE firm to itself are some other deciding factors of an IPO’s long term performance. (Mian and Rosenfeld, 1993) study the long-term performance of 85 reverse LBOs for a three year period starting from one day after the firm goes public. They find that reverse LBOs show significant positive cumulative abnormal returns and most of these returns are a result of take-over activity which occurs mostly in the second year after the IPO. These findings were unlike that of Ritter (1991). Other earlier studies of Degeorge and Zeckhauser (1993) and Holthausen and Larcker(1996) also indicate that RLBOs outperform other general IPOs or the newly floated firms on the stock market.