The capital market is a type of financial market in which the purchase and sale of securities representing the financial assets of listed companies, is carried out. It can be said that it constitutes a mechanism of saving and investment for the investors.
Types of capital markets
- Stock Markets
- Fixed income instruments: bonds and bonds.
- Equity instruments: shares.
- Long-term credit market
- Depending on its structure:
- Organized Markets
- Un-Organized Markets
The asset is issued for the first time and changes hands between the issuer and the buyer.
These assets are exchanged between different buyers to provide liquidity to these securities and for pricing.
The Capital Market is where the purchase and sale of securities, representing financial assets of companies and other economic units such as stocks, bonds, and long-term debt securities. This market gives investors the possibility to participate as partners (partly proportional to what is invested), in the capital of the best companies in Mexico. In contrast to the companies, it gives them the possibility of placing part of their capital among a large number of investors, in order to finance working capital and the expansion of the same company.
Provides high long-term profitability. It allows diversifying the risk of investment portfolios.
Being a high yield market derived from instruments issued by companies, which are subject to the interaction of multiple economic and financial variables, the investor must be aware that it participates in a variable yield market, where there is no guarantee of profits, So it is advisable to participate with the advice of an expert
Actors involved in this market
Different institutions of the financial system participate in the capital market, which acts as regulators and also complement the operations that are practiced within the market, the most important being: the stock exchange (they provide the operability demanded by financial operations from Of the supervision and registration carried out by the movements of the bidders and plaintiffs and also provide qualified information regarding contributions and the financial and economic situation of the companies ), issuing entities (these are institutions that place actions with the mission To be able to obtain resources from the investors, they can be corporations, the government, credit institutions or dependent entities of the state but decentralized), intermediaries or houses of exchanges and investors. It should be noted that the stock exchange is a private entity that provides a safe and legal context for the conduct of financial activities, basically because it is regulated by commercial law and the state.
Classes of capital markets
There are several types of capital markets depending on: what is traded in them (equity markets: equity and fixed income instruments and the long-term credit market: bank loans and credits); Of the structure (organized markets and unorganized markets); And assets (primary market: the asset is issued only once and is interchangeable between issuer and buyer and secondary market: assets are exchanged between different buyers, to print liquidity and attribute a value).
The state, throughout the world, proposes the regulation of these markets through various measures such as the establishment of tax or limits on volumes to be traded, the mission is to regulate the flow of entry and exit into the account Of capital of a country. And this measure is usually accompanied by exchange controls that try to restrict the freedom to buy and sell currencies at the exchange rate established by the market.
However, it is worth emphasizing that in order to apply these measures it is essential to analyze the situation and the context of the nation, since in some cases they may be counterproductive to the desired effects.