When you want to buy groceries, where do you go to? That’s right, you go to the wet market or supermarket.
When you want to buy businesses, where do you go to? You head to the stock market.
So, what is the stock market?
A stock market is where pieces of businesses (commonly known as stocks or shares) are bought and sold at a specified price.
Every country has its own unique stock market.
In Singapore, there are around 730 companies listed on the stock market. There is only one exchange, Singapore Exchange (SGX), where companies can list through a process called the initial public offering (IPO).
Stock exchanges provide the infrastructure to allow the trading of stocks (also known as shares). Without a stock exchange, companies would have no formal mechanism on which to list their shares.
Bigger countries like the US have more than one stock exchange. In the US, there are over 10 exchanges with the famous ones being the New York Stock Exchange (NYSE) and NASDAQ.
Stocks are not the only products listed under SGX. There are also other products traded on the local exchange such as bonds, warrants, exchange-traded funds (ETFs), real estate investment trusts (REITs), and business trusts.
Stay tuned for many more investing definitions in this new “What Is” series!