1.1 The Equity Market (Where the company owners meet…)

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來自 The University of Melbourne 的課程

全球资本市场的作用

373 個評分

The University of Melbourne

全球资本市场的作用

373 個評分

課程 2（共 5 門，Specialization 公司财务概要）

In this course, participants will learn about how different markets around the world can interact to create value for, and effectively manage the risk of, corporations and their stakeholders. This is part of a Specialization in corporate finance created in partnership between the University of Melbourne and Bank of New York Mellon (BNY Mellon).

從本節課中

An Introduction to Key Global Markets

We begin this course by exploring the importance of the financial market environment on corporate financial decision-making. Using the example of Kellogg’s, we cover the key financial markets that are reflected in the company’s financial statements. We briefly introduce their key functions and features in providing flow of funds, price discovery and risk management.

1.0 Welcome and Introduction (Getting organized)7:17

1.1 The Equity Market (Where the company owners meet…)8:25

1.2 The Debt market (Where the company lenders meet…)6:35

1.3 The Foreign Exchange Market (No company is an island…)9:04

1.4 The Commodity Market (Where real assets are traded…)6:48

1.5 The Derivatives Market (Where business risks can be traded…)7:24

與講師見面

Paul Kofman
Dean, Faculty of Business and Economics
Sidney Myer Chair of Commerce
Sean Pinder
Associate Professor
Faculty of Business and Economics

So let's get started with the equity market.

Of the markets we'll discuss in this module, the equity market

is probably the market where corporations are most visible to the public.

Let's start with the initial public offering,

the first time a company seeks public investment in its shares.

It's a comprehensive process.

The dot points here describe almost the complete procedure required

to introduce shares for public trading.

A significant role is being played on behalf of the company by investment banks.

Investment banks provide the access to the equity market for the corporation.

And it also provides a guarantee that the shares issued will be successfully

issued through underwriting the process.

Then there's the prospectus.

The public needs to be informed about the financial position

of the corporation in which they can now buy shares.

The accountants reports are crucially important

to verify the information provided by the corporation.

Then there is the road show

where the investment banks seek out interest in the shares of the company.

That's really the marketing phase of the shares.

Then finally, the shares are going to be issued at the issue price,

the price where demand meets supply, of which we will see more later.

And the allocation, how many shares will each investor get?

And lastly, to wrap up the process, the cash flow from the new investors in

the shares will finally find its way to the corporation.

That whole process describes the primary equity market,

the market where shares are first issued.

Once the shares have been issued in the primary market,

they are subsequently listed for trading on the secondary market.

That allows the new investors, the new owners of shares in the corporation,

to sell on their securities,

their shares, to other investors when they want to liquidate their position.

Hence, they do not sell these shares back to the corporation, but they will

sell them on to other investors interested in the shares of the corporation.

Before the corporation's shares do get listed on the secondary market,

the stock exchange as we know it.

A few conditions have to be met.

Those conditions, consider size of the issue,

liquidity of the share issue, and ownership.

All of these conditions serve to ensure that the exchange is actually

able to provide its primary function of providing liquidity to the investors,

allowing share investors to sell all their shares to other investors.

So what happens once the shares have been listed successfully on the stock exchange

for further public trading?

At that stage, continuous price discovery takes over.

And continuous price discovery will provide an opportunity for shareholders to

sell those shares at a fair and transparent price to other investors.

Fair and transparent, both to the buyers and to the sellers of those shares.

The company, meanwhile, still engages with

the secondary market, the secondary equity market.

The company will communicate with the shareholders by releasing,

regularly, price sensitive announcements,

which includes regular earnings figures and dividend payments.

But also,

any other material information that might have an impact on the share price.

So, what else happens once the shares have been listed?

Is the only role for

corporations to provide information on earnings and dividends?

Well, no.

Corporations actually use the exchange, the secondary market for

trading in shares themselves, as well.

For example, when new investment opportunities, new investment projects

arise, and a corporation seeks additional funding, additional equity capital.

So, capital erasings for

new investment projects would occur on this secondary market.

The corporation also has the opportunity to buy back its own shares to reclaim

ownership in the corporation so to speak.

It would do that if it is accruing cash that cannot be

more productively invested simultaneously.

And lastly the corporation might find partners, other corporations listed

on the exchange, that it is interested to merge with, or perhaps to take over.

It would do that by buying the shares of that corporation on the stock exchange,

on the secondary market for equity.

Having gone through the process of describing the issue of the shares and

the subsequent listing on the stock exchange,

the secondary market for equaity.

Let's take a closer look at what this market is really all about.

You've seen a graph where Kellogg's

share price was listed over time, as it was traded on the New York Stock Exchange.

The New York Stock Exchange trades many securities.

Close to 2000 shares, in fact.

It could have cost less and

graphed all of these equities, price development individually.

But it also uses indexes to describe the overall market mood.

The market development of shares on aggregate, on the exchange.

The New York Stock Exchange does that primarily

through the Dow Jones Industrial Average,

a small numbers of shares traded on the New York Stock Exchange.

It also does that for a much more comprehensive set of companies

through the Standard & Poor's 500.

Kellogg's is, in fact, one of the constituents of that index, and

it is given on this graph that you see here.

Kraft, one of the competitors of Kellogg's,

is listed on the NASDAQ exchange.

NASDAQ has got its own broad market index, the NASDAQ composite.

And it is also indicated on this graph here.

Other markets, overseas, equity exchanges,

have got their own indexes, like the FTSE100, for the London Stock Exchange,

and the increasingly popular Shanghai Stock Exchange Composite Index.

These indexes give a good impression to investors

of the overall market price developments.

We will get back to this when we discover price discovery functions of

equity markets.

Best known of the equity markets is the New York Stock Exchange.

A traditional, floor traded equity market.

When we discuss price discovery,

we will see what the implications of floor trading are.

It's important, because more and

more companies are nowadays listed on automated trading platforms.

The London Stock Exchange was one the first to introduce one such platform.

In an event labeled as the Big Bang.

Many exchanges have since followed suit.

Another development in equity market is the merger of exchanges,

or connecting exchanges across different countries.

Europe and its Euronext share trading system is a key example of this, that

has significantly enlarged the fundraising opportunities for European companies.

New markets emerge all the time.

Strong, growing economies like China and

Brazil have seen a matching development in the stock exchanges.

Lastly, equity trading is becoming increasingly global,

continuously expanding the investor base for

multiple listed corporations that seek funding where it is most affordable.

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