Money Exchange and standards Market failure and success

August 8, 2016

It is considered financial markets one of the important channels to attract the savings of individuals and invest them in the horizontal and vertical expansion for companies operating In the areas of commodity and service production and other new and established.

The more productive enterprises went to shift from family-owned businesses closed into joint stock companies, and the greater the number of individuals who wish to further invest in the stock market as investors are not speculators, whenever evidence of the evolution of the role of the capital market in supporting productive activities of all kinds.

It is known historically that banks have a key role at the beginning of the Industrial Revolution in Europe, especially in Britain, in transforming countries of agriculture and trade to the industry. But after the financial markets have become financier president of economic activities in the private and mixed sectors.

Seeking nations, usually, very hard to develop the laws that govern the behavior of companies in the capital markets and asks them precisely a lot of transparency and credibility in the dissemination of accurate information on their financial status so investors will be familiar with before making an investment decision.

Arab countries differ among themselves about the evolution of financial markets, particularly stock markets. In the form, a new culture of dealing in securities where the market compared to developed countries and even some developing countries are considered.

And calls for those interested and the other between the need to develop the Arab capital markets and convert the closed family businesses into joint stock companies as a means to develop the productive sector.

Despite the fact that investors, due to their ignorance of how the money market, are exposed often to losses is justified, some of these losses was caused by the behavior of listed companies in the market and a lack of credibility and transparency of the information provided to investors.

It is known that the share price reflects the company's success in its performance. But some of the companies shares are exposed to continuous descent, and see where the investor loses his fortune himself gradually, without a glimmer of hope in the possibility of the rise of the share price in the foreseeable future.

Taking him surprised that this company won the award the best institution in the scope of its competence in the Middle East. According to any standard it was awarded the prize? Or if the institution itself has achieved record profits.

Here, too, the investor asks what is His profit from these record profits if it has lost more than 80 percent of the value of the shares bought from this institution in other words, lost his fortune?

According to a follower of the activity of the financial markets in an article published some time ago, that the investment in financial markets about the middle class in one of the Arab countries to the poor layer as a result of the loss of wealth in the money market.

It did not appear that anyone in that state, both the Ministry of Finance or the central bank or the Capital Market Authority, do I care about the news and tried to find out the reasons that led to such serious outcome.

Theoretically, the share price is affected by any company or organization in a variety of factors, including: the company's own performance and the general atmosphere, which is exerting its activity. Stock rises a certain price if the company performed well because investors demand for acquisition increases.

And it gets the contrary, if they perform badly decreases demand by the investors and seeks to get rid of what is in their possession and thus increasing width stock prices drop.

The general atmosphere, is intended by the political, economic and security environment.

The lack of availability of a favorable environment for the company's activity is for people to invest in and trying to get rid of what they have to put an end to their loss.

This is what happens to stocks mixed companies in Iraq today, where individuals lost their wealth, which they invested in mixed companies as a result of the trade policy of the government since the occupation in 2003, which embarked markets to imports from all sides. Thus, these companies lost their local markets decreased production and reduced its activities to the extent that they become unable even to pay salaries to its employees.

This case can understand the reasons that led to it. If the company is making record profits and reap the awards on their performance, there is no justification for lower prices in the form of a continuous and on over the years.

And it becomes imperative for the stakeholders in the state that the company is subject to accountability for the cause of low share prices.

The reason may be that adults shareholders are seeking to reduce the price in a deliberate manner so that small investors sell at low prices, and they are also bought up their share in the company. The concerned authorities, in all cases, follow up the matter carefully and monitored closely and adjust.