Capital market is generally one of the great channels
for general public, company or government to raise finance; where inside this
market, financial securities such as bond and stock are traded to be sold and bought
by those potential parties around the world. That is why range of stock exchanges
(e.g. London Stock Exchange and New York Stock Exchange) is existed to satisfy consumers
mentioned. However, I ever realized that how they take advantages from capital
market may be different even though mainly it is to raise finance. Seeing general
public, they will definitely only rely on capital market to provide them with
dividend through investment that they made personally. Business typically use
capital market to have benefits such as corporate ‘advertisement’ and business solvency,
finally government sometimes emphasize on economic growth instead of only
raising capital for environment.
When we see company like Base Resources whom
act as the Australian iron ore company, they are currently became newcomer in
London Stock Exchange (reported on January 28/2013) - seeking for groups
particularly UK societies to help them raising capital internationally for
their Kwale Project in East Africa concisely saying. In this case I consider
that capital market then help them to increase their publicity through
announcement and promotion from internal member as well as opening access or opportunities
for investors to put interests in the company and the project.
Yet, the question here is “Will they continue
to enjoy the practical merits from capital market?” In terms of this, I may just
say perhaps. Why? Because entering capital market does not really mean users
take its practical merits afterwards. People would likely to argue as
unpredictable conditions always happen and anything will be back to their
selves. As to consider, capital market has wavy nature following some factors such
as value of each company and how they handle hovering information in public zone
(we may reflect this in stock market efficiency philosophy). Internal resources
from Base Resources are now grinding capital to give best possible output for investors;
nonetheless the imperative issue that I want to say will be the share price
should be above the given line ‘today’. This could be by approach commencing the
decent production initiation of which thus let the share price can be higher
than before. Based on my research, this company has targeted that their production
will begin in the second half of 2013, which is imminent.
In my perspective, Base Resources will be continuously
receiving benefit from capital market as long as they are able to cope with its
entire business performance and share price movements. Rationally thinking, if they
done so, in addition to the increase in status, potential investors will be
attracted to invest in it since it will give personal advantages to them; hence
more and more capital can be received. Likewise this will enable general public
and government who bought its shares with low price to sell it with higher
price (or either it can be maintained if they feel the price will be higher
later). Since it turned out to be high, these investors will become pleased as
there are chances to obtain earnings.
The endorsement in terms of the practical
merits for them is also in the form of dividend payments. The greater the
company’s performance, the more profitable they will be and dividend payment
could be higher. Beside Base Resources’ point of view, therefore this indicates
that both general public and government in this case should be picky in
choosing which company to be invested in. Investigation of financial
performance from profitability, liquidity, investor analysis, company’s background,
including benchmarking may help them to grab advantages from capital market. This
concludes that capital market indeed take role to be financial intermediary,
but the incentives itself mostly realized and taken by the users. Be aware that
not only seeing people using capital market to gamble for uncertain things
however places to have good gambling (range of companies listed in stock
exchanges)and how they gamble affect the most!
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