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Factors Affecting Share Prices

The entire sorts of influences affect share prices. These influences involves as:

1. The current profit record of the company particularly the current dividend paid to shareholders and the prospects of their stability and development.

2. The development prospects of the industry whether the company operates.

3. The publication of a company's financial conclusions that is Balance Sheet and loss and profit statement.

4. The general economic situations as like boom and recession as like throughout boom, firms would have high profits thus rise in prices.

5. Change in company's management as like entry and exit of prominent corporate personalities.

6. Change on Government economic policy as like spending, monetary policy, taxes so on. These alterations influence investors' expectations.

7. Rumour and declarations of impending political changes as like General elections and new president will reasons uncertainty and anxiety and adversely affect share prices.

8. Rumours and declarations of mergers and take-over bids.  Whether the shareholders are offered generous terms or prices in a take-over, share prices could increase.

9. Industrial relations as like strikes and policies of other firms.

10. Foreign political improvements where the economy heavily depends upon world trade.

11. Changes in the rate of interest on Government securities as like Treasury Bills may create investors switch to them. Exchange rates will discourage or encourage also foreign investment in shares.

12. Declarations of good news as like such a main oil field have been struck or a main new investment has been undertaken. The NPV of that investment would be reflecting in share prices.

13.  The visions of expert's like articles by well-known financial writers can persuade people to buy shares hence pushing the prices up.

14. Institutional buyers such as insurance companies can influence share prices by their actions.

15. The value of assets and the earnings from utilization of such assets will also influence share prices.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9520371

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