Nepal Share Market - Basic Understanding of Share Market 2024 - Nepali Tech News Blog

 Basic Understanding of Share Market: 

Nepal Share Market - Basic Understanding of Share Market - GadgetGurkha 

• What is share?

• What is a Share Market?

• Why is a share market necessary in every country?

What is Share?

   Share is a term and a financial instrument made for giving  and transferring ownership. For example, Ram and Hari are Friends and  they open a company, where  a partnership carries 50%, 25% and other percentages. That all percentages are all about ownership. And that means a share is ownership. If someone asks, what is a share in a simple way? then share is a ownership. When someone asks you, 'What percentage of company do you hold ownership of? ' It means how many shares of that company you are holding. So share is nothing. It's simply ownership. Share is a term and a financial instrument made for giving  and transferring ownership.

What is a Share Market?

   It's the same, ownership of shares, of which company do I own a share, and I had to sell it  or someone wanted to be a shareholder of that company. It means the market for buying and selling shares is called the "Share Market." The shares of a private company are not listed on the market because a private company is something that is in a very close circle. For that, you can't go to the open market and trade.

Shares of a private company are not listed on the stock market.Listing in the share market always means public limited companies, where the number of people is little huge, and you can buy and sell those in the open market. So, only public limited companies are listed in the share market, and the place where these public limited companies are bought and sold is called the share market.

Why is a share market necessary in every country?

    The share market is a great platform for the source of business capital. For example, any public limited company had to expand. From where does he get the funds that he does not have to expand, then? The only other solution is to take a loan. What happens after getting a loan, in a company is you are looking to expand, At the same time, you took out a loan. You will get a loan only if  you are capable of paying it back. and additionally,  the interest is attached to the loan. You must be paying interest to the bank whether  you make a profit or a loss. Additionally,  the principal amount must be repaid. You're looking to expand the company, aren't you? You are looking for a company with full capacity, But at the same time, you also have to start paying interest  from the day you took out the loan. Because of it, You have not been able to expand your company.
  It's another alternative is to go to the share market and if you raise your money from the public, then that does not come as a loan. You give them the ownership of your company. After giving ownership, it is like taking on an extra partner. If there is profit, distribute the profit. It's up to you to decide whether to distribute it or not. Nobody reaches out to you demanding their invested money back in the case of a loss.
Additionally, it is easy to raise a huge amount of capital for a company so that company can reach its potential as soon as possible. At the same time, there is no pressure to pay interest and principal. The company can only focus on its expansion and its work.

what is the benefit to the country?

1. Revenue Generate

   One of the biggest revenue sources in each country is the share market. The government collects taxes through the share market. Every share is bought and sold, including government taxes. So even from that, the government gets huge revenue. That's why there is a share market in each country.

2. Promote Investment

   Speaking about the second point, the share market promotes investment. It's because the government's job is to create policies for each sector. For example, the agricultural sector and the real estate sector had to be developed, and once the tax-friendly and beneficial policies are in place, the majority of people will invest in those sectors. And what benefits do the investors get is that if any small company or company in an unnoticed field which has huge growth potential, then that investment is going to be very good in that company or that sector. Investors can benefit from a very good return in a short period of time. Because of that, Most investments are made more convenient by government policies and creating an investment-friendly environment. in different sectors:hydropower sector, agricultural sector, real-estate sector, any research and development sector. If the government has made a policy to make money by investing in it or to save it by investing in it, then even if the government does not invest in it, different sources of funds are invested  by the investors in that sector. Due to which, that sector will also be growing. At the same time, growing that sector means, the grow in the economy of the country. And because of that, the economy of the country also gets a plus point, and the share market also helps to diversify your investment. So, due to this, the share market is also very important to promote investments in different sectors.

  Share Market is a good source of investment for the government also. It is because public projects such as water treatment plans or public community services, and different government projects cannot be funded by the government. If the government has to fund what they have to do it they have to take a lot of tax from us and that cannot be taken seriously. As a result, the government issues public bonds,  government bonds. And the government raises capital through bonds. If you have heard of government security or security bonds in the market, this is the method by which the government raises money for projects that are pretty safe. because investment at government level is little more secure, than  private level. Because of this, to raise funds for the project, through the share market, the government can raise a huge amount of capital  by issuing government bonds. Because of that, even those projects can move forward smoothly. And if the government believes they can fund that project with tax revenue only, then that project cannot be done because huge funds are needed. And since the tax money alone is not enough to fund the project, it is better to raise capital through the share market and invest in those projects. It's good for country's economy and  different sectors will grow too.

3. Economic state of the country 

   And when it comes to another point, it is about what is happening to the economic growth of a country, which tells the people of the world like what is the state of the economy in Nepal? , what is the state of the economy in China? , what is the state of the economy in the USA? Its criteria are somewhat based on the prices of that country's stocks.
There is an average price for stock exchanges, like: Nepal has Nepse, India has Sensex and  BSE then the Nasdaq in America is also quite popular.
So, at what point is the listing of stock market right now? What's going on? It gives a number to evaluate the  economic growth in the country. from that, the chances of foreign investment coming to the country is much higher.  So, any stock market gives an economic perception of that country. So, that's why it's very very important for a country to have a stock exchange.

Conclusion

  Because of internet, share market is common subject nowadays. Everybody wants to invest in share market. Basically Share Market is a ownership of a company that you have . You can sell and buy a Share of a company through Share Market. In the context of Nepal, There is a Share Market called NEPSE, where you can easily buy and sell a share .