Aus_EquityMarket - Chapter 9 Australian equities market 1...

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Chapter 9 Australian equities market 1
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Table of Contents 1. Process of trading shares 2. Nature of securities traded 3. Market participants 3.1 The ASX 3.2 Brokers 3.3 Fund managers 3.4 Individual investors 4. Trading methods 4.1Pre opening and opening call auction 4.2 Normal trading 4.3 The Price Information Window 4.4 Order depth window 4.5 Closing call auction 4.6 Off market trading 4.6 Off market trading 4.7 Trade History 4.8 Information dissemination procedures 5. Settlement procedures
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1. Process of trading shares In this lecture we will discuss: The trading of a company’s equity securities How the Australian equities market operates Some background information In Australia, shares are traded on the Australian Securities Exchange (ASX) The issue of new shares to the public is referred to as the primary equity market Subsequent trading in stock markets is referred to as the secondary equity market 3
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1. Investor contacts a stockbroker, who opens an account for the investor to deposits funds into 2. Investor places an order with the stockbroker by phone or internet. Orders may be: 1. Market orders the broker is instructed to buy or sell shares ‘at the current best market price’ 2. Limit orders the broker is instructed to buy or sell only when the market reaches a maximum/minimum price specified by the investor 4 1. Process of trading shares
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3. The stockbroker attempts to execute the order via a counterparty Using the Integrated Trading System (ITS) By contacting another client directly (by telephone) and trading “off market” Usually for large amounts 4. Settlement takes place, where the ownership of shares is transferred in exchange for a transfer of cash 5 1. Process of trading shares
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Table of Contents 1. Process of trading shares 2. Nature of securities traded 3. Market participants 3.1 The ASX 3.2 Brokers 3.3 Fund managers 3.4 Individual investors 4. Trading methods 4.1Pre opening and opening call auction 4.2 Normal trading 4.3 The Price Information Window 4.4 Order depth window 4.5 Closing call auction 4.6 Off market trading 4.6 Off market trading 4.7 Trade History 4.8 Information dissemination procedures 5. Settlement procedures
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2. Nature of securities traded In addition to shares, ASX is also used to trade: Corporate and government bonds Hybrid securities Warrants Futures Exchange traded funds (ETFs) We will focus on equity securities 7
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Instruments–ASX 200 by sector (as of 2 May 2011) Source: http://www.standardandpoors.com/indices/sp asx 200/en/us/?indexId=spausta200audff ‐‐ p au ‐‐‐‐ Index Name 1 Year 3 Year 5 Year TOTAL RETURNS 4.58% -0.49% 2.60% PRICE RETURNS 0.33% -4.83% -1.71% PRICE RETURNS BY SECTOR Energy 6.79% 0.43% 5.48% Materials 13.29% -3.13% 4.49% Industrials -7.03% -11.71% -8.07% Cons Disc -10.79% -9.14% -9.24% Cons Staples 5.05% -0.24% 4.65% Health Care
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Aus_EquityMarket - Chapter 9 Australian equities market 1...

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