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LORD JESUS CHRIST SAYS

“You have heard that it was said, ‘Love your neighbor and hate your enemy.’ But I tell you, love your enemies and pray for those who persecute you,

1 Dec 2017

STOCK EXCHANGES- HOW DOES STOCK EXCHANGE AFFECT THE ECONOMY?



Hi Friends,    Stock Markets are important factor of the economy.  It is actually a mirror image of how an economy is performing over the years.  If the Stock Exchange is performing considerably well, economy is on a great path otherwise it is clearly growing at a slow pace growth rate.

People who invest massively in Shares:



Anybody with a large investment in equity market will be affected by the stock market. It affects the investor confidence in country.  For eg. , Overseas investors have pumped in investments of US $ 2011 billion in Indian Equity markets via FII’s in the first half of the last year, mainly on hopes of a stable and reform-oriented government at the Centre, if due to instability and fringe elements, the Indian government fails to protect the Investor sentiment, Investor may withdraw their massive investment, causing stock market to fall which in turn creates panic environment for both the government and the investors.  This is the main reason you don’t see much investment in war torn and countries engaging in civil war such as Afghanistan, Somalia, Syria, Iran etc.  Firms who are expanding and wish to borrow often do so my issuing more shares because it apparently provides a low cost way of borrowing more money.  But, with falling share prices it becomes much more difficult.

People who don’t invest heavily in Shares:

Many believe that if you don’t invest in the stock market, a stock market crash doesn’t affect you.  However, any ordinary citizen loses money and opportunities all based off the stock market.When the stock market begins to fluctuate, companies tend to cut the Employee Benefits by pulling back on their employees’ retirement, healthy care plans.  It impacts student’s University education as when money gets tight, people stop saving and this includes their children’s education savings.  Properties or real estate tends to get more expensive as interest rates rises.  This creates a bone of contention as income of the people doesn’t show any momentum and as a result the property bubble may burst causing property prices to fall intensively which may affect people who have massive investment in real estates.  Unemployment, most companies keep their money mixed in equities, and hence a rapid drop may dissolve their assets and so to make up for this, Companies would lay off employees to try to stay afloat.  So Stock Exchange smooth functioning is very important for the economic growth of the country.  So monitoring the movement of the market is the main function of our Finance Ministry.

Thanking you,                                                               See You Later.

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