The stock market and its importance in the economy.

 

The Stock Exchange and the Economy...

The stock exchange, the strength of any country's financial markets, its indicators, and the rate of trading, whether buying or selling company shares, are strong evidence of the strength of the economy in the country where the stock exchange is located. The stock exchange plays an important role in encouraging investment and pooling small capital into large investments and entities.

Any large company, such as technology companies like Google, Apple, Nvidia, Facebook, X, automobile companies, global banks, large clothing factories, or any large facility, is listed on the stock exchange in the country in which it operates, subject to specific listing requirements for each country. The Egyptian Stock Exchange has listing requirements that differ from those for companies listed on Wall Street, the most well-known American stock exchange in the world. However, publishing and reviewing financial statements, which include the company's assets, liabilities, and equity for at least two years from the date of its listing on the stock exchange, is important and consistent...so that the price of each company's shares can be evaluated. This is a constant on all global stock exchanges. Small business owners may wonder why large companies insist on listing on the stock exchange.

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The answer is that anyone with a small surplus may go to the bank to deposit it, but the interest rate may be low. For example, if someone goes to buy a share in Coca-Cola or Pepsi... the share price is 1,000 Egyptian pounds... and is entitled to annual dividends that are distributed... and if the share owner needs to get back the 1,000 pounds, he sells the share he owns on the stock exchange. But at the selling price, which may represent a loss or a profit depending on the share price announced on the stock exchange at the time of sale. Therefore, it is easy for small investors and those with weak capital to enter the commercial market and exit the market with the least possible losses... and large companies are keen to be listed on the stock exchange to attract investors to buy their shares. When there is a need to add a new production line or new investments in the factory or company, the capital is increased and more shares are offered for sale on the stock exchange. Therefore, the stock exchange plays a very important role in financing and increasing the business of existing establishments. And attract more investors to become shareholders in large companies... and that gathering small capital owners to invest in large entities with high professionalism, extensive experience, professionalism and training in their field and achieve profits. This is better than investing or entering into a partnership to form a small company... surrounded by the risks of competition and threatened by losses from the first day of its establishment. Therefore, the stock exchange is very important for small and large investors and the giant companies listed on it... and interest rates in banks may not be satisfactory to some capital owners, and therefore the decision is to move towards investing in stocks... rather, some small, medium and small-sized companies have financial surpluses or profits set aside from previous years and may head towards purchasing shares in large entities. By converting these profits into shares instead of having them in their bank account or making a deposit at low interest rates that do not satisfy the owners of small and medium-sized companies. The stock market is a financial instrument and an alternative for investment and pooling capital into large economic entities. It drives any economy forward.

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