| Word/Term |
Definition |
| Allotment |
The number of shares allotted to
a subscriber of a new issue of shares. |
| Analyst |
An individual employed by a
securities firm to perform investment research. |
| Annual report |
A financial report or statement
issued by a publicly listed company at the end of a financial year to its
shareholders, and is usually audited. |
| Application
money |
The amount of money that is
payable for the application of new IPOs or offers for sale. |
| Arbitrage |
Buying shares in one market and
then selling them in another at a higher price to profit from the price
differential. |
| Assets |
Everything that a person or
company owns or has due to it. Cash, investments, money due, stock and materials
are assets; buildings and machinery are fixed assets; patents and goodwill are
intangible assets. Assets surplus to liabilities are net
assets. |
| Balance sheet |
It represents a snapshot of the
company’s financial position as at a point in time, which is usually the
financial year end. |
| Bear market |
A market that is characterised by
prolonged decline in stock prices and low trading volumes. |
| Bid |
The purchase price offered for a
stock. |
| Blue chips |
An expression widely used to
describe ordinary shares of the highest investment calibre. These are listed
companies with a good track record of steady profit growth and dividend
payments, good management and sound reputation. |
| Board lot |
Each board lot is typically made
up of 1,000 shares on SGX. However, some counters are traded in board lots other
than 1,000 shares. |
| Bond |
A form of debt or fixed income
security which pays a fixed interest for each specified period and has a
maturity date. It is generally a promise to repay the principal and the interest
on specific dates. |
| Bonus issue |
Distribution of funds to
shareholders in the form of shares, issued free. |
| Book Closure
Date |
The day when the shareholder
records of a company are closed for registration in order to determine the
entitlement of dividends, rights and bonus issues. |
| Book value |
This represents the total amount
of a company’s assets minus liabilities and if issued, preferred stock.
|
| Book-entry |
The transfer of ownership records
at a central location without the re-registration of physical certificates.
|
| Book-entry
securities |
Securities that are not
represented by physical share certificates, and ownership of securities is
transferred and recorded electronically without the physical delivery of paper
certificates. |
| Broker |
A broker is a licensed capital
markets services’ representative of a brokerage firm, and acts as an agent or
intermediary for investors to buy and sell shares on their behalf. He is paid a
commission or a brokerage fee for his service. |
| Brokerage |
The fee a broker charges when he
buys and sells securities in the secondary market on behalf of his clients. Also
known as commission. |
| Bull market |
A market characterised by prolong
rises in stock prices and high trading volumes. |
| Buying-in |
The repurchase of securities at
the seller’s risk when he fails to deliver securities to the buyer by due
date. |
| Call option |
A contract that gives the buyer
the right to buy a given quantity of the underlying asset at a predetermined
price on or before a specified date. If the option or right is not exercised the
option expires and the buyer forfeits the money. |
| Capital gain |
The profit made from selling a
stock at a price higher than the price it was bought at. |
| CataList |
Catalist is a market operated by Singapore
Exchange Securities Trading Ltd, with a Sponsor- supervised model. For more
information visit www.sgxcatalist.com. |
| CDP |
Also known as The Central
Depository (Pte) Ltd, it provides depository, clearing and settlement as well as
computerised book-entry services for securities traded on Singapore Exchange.
|
| Chartist |
A person who uses past price
movements to determine future price movements of shares. |
| Closing price |
This is the last done price at
which the stock was traded at before the close of trading day. |
| Collateral |
Securities or other assets
pledged by a borrower to guarantee a loan. |
| Contra |
A form of trading where the
investor does not collect the securities he purchases nor delivers the
securities he sells, but arranged to settle outstanding differences which may be
profits or losses. |
| Contract |
An agreement between 2 parties to
make and take delivery of securities. |
| Contract note |
Document sent to a buyer or
seller confirming the transaction and showing details as to price, stamp duties,
brokerage and total value due. |
| Convertible bond
|
A bond that may be exchanged for
a specified number of shares of the issuing company. |
| Corner |
Situation whereby a single
interest or group has acquired such control of any security that the same cannot
be obtained for delivery of existing contracts except at prices and on terms
dictated by such interest or group. |
| Corporate
Actions |
These are actions by the company
which can have a significant impact on the value of that security, as a result,
on the value of the shareholder’s portfolio. |
| Covered warrants (also known
as structured warrants) |
A warrant which entitles the
warrant holder a right to purchase a security issued by a 3rd party (usually a
financial institution) which is not the issuer of that security. A specified
amount of the underlying security shall be reserved or secured for the exercise
of the warrant. |
| Cum all |
Includes all declared
entitlements. |
| Custodian |
A bank, financial institution or
organisation which keeps the physical scrips or other assets on behalf of an
individual or corporate clients. Also performs other financial duties such as
settlement of transactions and handling corporate actions in relation to the
custody of those scrips. |
| Date payable |
Date when declared dividends are
payable. |
| Debenture |
Refers to a form of securities
representing money borrowed by a company and charged in part or whole on the
company’s property. Debentures bear a fixed rate of interest and the capital sum
is normally repayable with a fixed term.
They are
usually traded in the same manner as shares. |
| Delinquent
account |
An investor’s trading account
that has been frozen as a result of failure to settle an overdue
payment. |
| Delisting |
Removal of a company’s listed
status, and the shares of this company will not be allowed to be traded on
SGX. |
| Depository |
An institution which provides
central depository of certificates and where ownership of shares is transferred
and recorded.
CDP, which also provides clearing
and settlement services, is the only depository in Singapore. |
| Derivatives |
A financial instrument that
derives its value from the price of another more basic instrument.
For instance, stock options are derivatives with
the price derived from the price behaviour of the underlying stock. Derivatives
trading is a tool for investment risk management. |
| Disclosure |
SGX imposes certain requirements
on listed companies in relation to disclosure where they are called to disclose
material information that may affect share price movement, shareholders’
interests or investment decisions. |
| Dividend cover |
The extent to which a firm’s net
income supports the company’s total dividend payment. |
| Dividend |
A share of the company’s profits
distributed to shareholders of the company’s ordinary and preferred stocks. The
dividend payout is determined by the company’s board of directors and may be
paid out in cash or stock dividend. |
| Dividend Yield |
Rate of dividend return, shown in
percentage form. The formula for calculating the dividend yield:
Dividend Yield = Dividend x 100 / Earnings per share |
| Earnings per
share |
It is the portion of profits
earned for each ordinary share. |
| Equity shares |
Shares having a claim to
participate in the whole range of annual profits remaining to a company after it
has satisfied all charges and met any fixed preferential dividends, and having a
right to participate in surplus assets in a winding-up. |
| Ex all |
Excludes declared
entitlements. |
| Exercise price |
The price stated in a warrant or
option at which ordinary shares can be purchased after the due
date. |
| Force-sell |
The sale of securities at a
buyer’s risk when he fails to pay for the securities purchased
earlier. |
| Fundamental
analysis |
The evaluation of economic and
financial analysis in investment decision-making. |
| Going public |
When a company issues its shares
to the public for the first time. |
| Hedging |
A strategy to offset the negative
effects on the return of a primary position, for example, a stock portfolio, by
taking a secondary position in derivative products. |
| Index |
Measures the stock market
movement based on a group of selected counters or sectors. For the Singapore
market, the most common index is The Straits Times Index. |
| Insider
trading |
The illegal buying or selling of
securities on information that is generally unavailable to the
public. |
| Interim
dividend |
A dividend paid during a
company’s financial year, usually at the end of the first six months’
trading. |
| Investment |
To acquire an asset with the
expectation of growing value in the future. Linked to the concept of
ownership. |
| Initial Public Offering
(IPO) |
Also known as a new share issue.
A company’s first offering of stock to the public for subscription.
|
| Issued capital |
The capital for which shares have
been issued; often in distinction to the nominal or authorised capital. The
latter term means capital for which the issue of shares has been authorized and
on which capital stamp duty has been paid. |
| Liquidity |
The ability to convert assets to
cash readily. |
| Listed company |
A company that has met the
requirements set by SGX to qualify for a listing and its shares are traded on
the stock market. |
| Listing day |
The first day of trading for an
IPO. |
| Loan stocks |
These are debt securities. The
company issuing the loan stock borrows from the loan stockholder a principal sum
equivalent to the nominal value of the loan stock. The company undertakes to pay
the holders of the loan stock a fixed amount of interest at a certain fixed rate
at specific intervals, and to repay the entire principal sum owed at the
maturity date of issue. |
| Mainboard |
A trading board where companies
have met SGX’s stringent financial requirements to qualify for a
listing. |
| Margin account |
A securities account opened in
the name of the investor with a broking company for the sole purpose of margin
trading. |
| Margin call |
Call for additional funds or
shares so that the minimum acceptable level is restored. |
| Marked to
market |
Refers to the status of an
investor’s margin account at the end of each trading day. For example, if the
margin deposit falls below the maintenance level, the investor will be required
to put in more money to restore the level to its initial margin level.
|
| Market
capitalisation |
Market value of a listed company
and is derived from the total number of shares issued multiplied at their market
price. |
| Market Maker |
Market-making is a critical
component in the development of liquid markets. Market makers do not attempt to
profit from predicting the future trends in prices. Rather, their focus is to
identify the equilibirum price at which demand and supply are balanced at a
given moment.
After correctly identifying the
equilibrium price, the market maker offers a two-way price (ie. bid and offer)
and thus providing liquidity to the market and supplies prices for buyers and
sellers. These market makers are required to maintain two-sided markets during
exchange hours and are obligated to buy and sell at their displayed bids and
offers.The reward is the benefit of spread between bid and offer prices. By
selling to and buying from different people, the market makers get the benefit
of spread between his buying (ie. bid) and his selling (ie. offer) price.
|
| Market price |
The price of shares
traded. |
| Market-value weighted
index |
An index in which each counter is
weighted based on the counter’s market value. |
| Management Fees
|
The amount a fund pays to its
investment manager for the investment management associated with the overseeing
the fund's portfolio. |
| Odd lot |
The number of shares that is less
than the normal unit of trading, known as a board lot. For SGX, this would be
any quantity less than 1,000 shares. |
| Offer price |
The price at which shares in an
initial or secondary offering are offered to the public. Also known as the
subscription price. |
| Options |
A derivatives instrument where
the buyer has the right to take up certain shares on specified terms within or
at a specified time. |
| Over-subscription |
This occurs when the number of
shares applied for exceeds the number of shares offered for subscription in an
IPO. Oversubscription rate is the number of times the number of shares applied
for exceed the number of shares offered for subscription. |
| Over-the-counter
trading |
Trading in securities that are
not listed on a stock exchange. |
| Portfolio |
Investor’s holding of securities
of various types. The wise investment policy is to build up a balanced portfolio
according to personal requirements. |
| Preference
shares |
Shares taking precedence over
other shares of the same corporation with regard to dividend and liquidation
distributions. |
| Premium |
The amount by which a security is quoted or issued
above its face value. |
| Price-earning (PE)
ratio |
By definition, it is the ratio of
the current market price over earnings per share. |
| Primary market |
Securities are first offered for
sale in this market. For example, an IPO, the sale of a new bond,
etc. |
| Private
placement |
A direct sale of securities
between an issuer and an investor. |
| Profit-taking |
A phrase describing the sale of a
security which has risen in price. As sellers realise their profits, the price
is depressed in the process. |
| Proxy |
Written authorisation given by a
shareholder to another person to vote on his behalf at a shareholders’ meeting.
|
| Rally |
A rise in stock price(s) after a
period of decline or consolidation. |
| Remisier |
A licensed Trading Representative
who is an agent of an SGX member broking firm and who shares commission with the
member broking firm. For more information on remisiers, please visit
www.remisiers.org |
| Rights issue |
An issue to existing shareholders
in a fixed proportion to those they already hold, at a given price. The
shareholder is given an option to exercise or renounce his interest in the
rights. |
| Scripless
trading |
Trading without the physical
transfer of share scrips. Scrips are immobilised at CDP and beneficiary
ownership is processed on a computerised book-entry basis. All new issues are
traded on a scripless basis, while existing counters were converted into
scripless trading. |
| Secondary
market |
Trading in existing securities
which takes place in the secondary market. |
| Securities |
A term used to refer to all
shares, debentures, notes and bonds. |
| Settlement |
The final point in the trade
process where after the trades are executed, securities and monies are delivered
and exchanged by settlement date. |
| Settlement
date |
Settlement generally occurs three
business days following the trade date (T), which is T+3 days. This is known as
the settlement date. |
| Shareholder |
One who owns part of a listed
company and who has the right to vote for the Board of Directors and on
corporate matters. |
| Short selling |
The sale of shares which the
seller does not own. This occurs when the seller is anticipating a fall in the
stock’s market price at which time he will buy to offset the borrowed shares. He
makes a profit on the difference between his short sale and later
purchase. |
| Structured Warrants (also
known as covered warrants) |
A warrant which entitles the
warrant holder a right to purchase a security issued by a 3rd party (usually a
financial institution) which is not the issuer of that security. A specified
amount of the underlying security shall be reserved or secured for the exercise
of the warrant. |
| Takeover |
A takeover occurs when the
Offerer, either a person/company or a group of persons/companies acting in
concert, seeks to gain voting control in another company (the Offeree).
|
| Technical
analysis |
A method of forecasting price
movements through trading volume and price studies. Technical analysts use
charts and technical indicators to identify and project price
trends. |
| Trading
Representative |
See Broker. |
| Trustee |
A person or entity who is
responsible for another person’s or entity’s assets and/or
investments. |
| Turnover |
The volume of trading measured by
the number of shares traded and the value of share
transactions. |
| Underwriter |
The party which arranges for the
issue of new securities. Underwriters guarantee full subscription by taking up
all unsubscribed shares. |
| Unit trust |
An investment where investors
pool their funds together and invest in securities through a professional fund
manager. Investors can participate in the trust fund by buying units from the
fund manager. Each unit represents a fraction of the portfolio
held. |
| Warrants |
Provide shareholders with the
right, but not the obligation to subscribe for a given number of ordinary shares
in the company. |
| Yield |
Effective return to an investor
from a particular security, expressed as a percentage on the current market
price. |
