Equities

Ordinary share, or common stock, represents equity or an ownership interest in a corporation
Widest known type of financial instruments.
Transactions made in listed securities in Hong Kong are cleared through the Central Clearing And Settlement System (CCASS), a computerized book entry clearing and settlement system.
Shareholders have 2 ways of gaining – buy low sell high and from dividend paid by the company
Share prices can change rapidly. In general equities are considered riskier than money market and bonds.
Earnings, not dividends, are the source of a corporation’s value

Dividends – payments made in cash to shareholders. Typically declared semi-annually, and are paid to current shareholders on dividend date as specified by the board.

Those shareholders who are to receive the dividend are identified by the use of ex-dividend date.

Advantages and Disavantages of Equities

Advantages

Disdvantages

Dividend income

Capital appreciation

Part ownership of company

Limited liability

Liquidity

Higher return than bonds

A good hedge against inflation

Subject to fluctuations in company earnings

High short term price volatility

Market risk

Company risk

Economic risk