What are Stocks?

Stocks are publicly-listed companies on the share market or stock exchange. Companies can go public by launching an initial public offering (IPO).

Stocks are publicly-listed companies on the share market or stock exchange. They are categorised into industry sectors, based on what the company does. For example, banks are categorised into ‘Financials’ and technology companies are listed under ‘Information Technology’.

By listing on the stock exchange, companies allow the public to buy shares in the business. A share is a unit of ownership, giving shareholders equity in the company. Therefore, as a shareholder you are entitled to a portion of the profits the company makes, which is known and paid as a dividend. If the company value decreases on the other hand, shareholders may not receive dividends and potentially lose money. Shares are bought and sold on stock exchanges around the world and can be done through a broker or an online share-trading platform. Shares can only be purchased and sold through the stock exchange’s trading hours. Shareholders have rights to receive company information and vote at annual general meetings (AGMs). You can start buying company shares for as little as $500.

Companies list on a stock exchange through an initial public offering (IPO) where it sells shares to investors and the public at a set price, before it begins trading. An IPO usually requires a minimum number of shares to be purchased. Funds raised from the IPO are then reinvested. Companies choose to list on a stock exchange to raise capital and fund future growth, while heightening its profile with investors and the public.



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