09.12.2018

In this article, we will highlight features of economic relationships at the stock market as well as factors impacting the stock market.

Features of Economic Relationships at Stock Market

The stock market is one of the system elements of the finance market. Like other market types, it denotes the interaction of entities of economic affairs in the given area through the use of specific objects. Conducting activities at the securities market, entities strive to gain additional incomes from their monetary resources or a part of their funds, serving as objects of economic relations.

In other words, the share market is a totality of economic cooperation in terms of the emission and management of security papers.

A security paper, in its turn, acts as the main object of transactions and has an ambivalent structure. On one hand, a security paper is a commodity by itself with which deals are made. At another point, a security itself is not valuable – only the asset, assigned to this document, is valuable. Such an asset can be money or a part of a capital.

Equities market, as a component of a larger economic system, can influence the security papers by its activity, while it is also exposed to the influence of economic changes occurring in other economic systems.

Functionally, stock market fulfills the following tasks:

• Determines prices of stock instruments;
• Establish a balance between demand and supply;
• Allows reallocating monetary flows within regions of a country and sectors of the national economy;
• Performs the accumulation of monetary assets;
• Stimulates market players to develop their businesses with an aim of increasing revenues and using these revenues in stock operations;
• Promotes business enlargement;
• Affords the state an opportunity to attract money resources to the budget.

Securities market parties include:

• Organizations performing regulatory and controlling functions;
• Economic entities acting as emitters of stock instruments;
• The government;
• Intermediaries operating on stock platforms on behalf of emitters;
• Special organizations hosting the assets;
• Professional market agents;
• Households;
• Banking and financial institutions.

Security papers can be issued by state authorities (federal, regional, and local power structures), companies limited (corporations), privately-owned enterprises, companies, foundations, etc.

Absolute and relative performance indicators are used to determine the parameters of market stability and development. These include the volume of capitalization and index rates of the stock activity.

Capitalization is a volume of securities circulating at the market.

A stock index is an average price fluctuation of a certain group of stock instruments. The stock index is the major indicator of the security market stability.