The world of capital markets will continue to grow along with the increasing number of companies going public and the number of people. Talking about the 'capital market', do you know what the capital market is?
The capital market is a meeting between parties who have excess funds (investors) and those who lack funds (issuers) to trade short-term securities and long-term securities. And what is transacted is company securities, aka shares.
In the capital market there are buyers and sellers and there is price bargaining, but the goods traded are stocks. The only difference is that in the capital market with the current online trading system, we do not meet buyers and sellers directly.
The capital market will provide benefits both for issuers (companies) and for stock traders, in this case traders and stock investors. For companies, the company as a party that needs funds will list on the Indonesia Stock Exchange (IDX) to obtain additional funds used for expansion and pay debts.
The company will get funds from the results of trading shares on the primary market. When the price offered during the initial market offering exceeds the par value or par value, the company will obtain additional paid-in capital reserves or known as share premium.
Meanwhile, investors as parties who have excess funds will get returns in the form of capital gains and capital yields. Capital gains are obtained when the selling price of the stock is higher than the purchase price. While the capital yield is obtained when the company distributes dividends to shareholders
CAPITAL MARKET BENEFITS
1. Provide a source of (long-term) financing for the business world and for issuers at the same time, thus enabling an optimal allocation of resources
2. Providing investment opportunities for investors as well as diversification efforts
3. The spread of company ownership to the middle class
4. Creating interesting jobs or professions
5. Give the opportunity to have a healthy company and good prospects
6. Fostering a climate of openness to the business world. With the development of the capital market, there will be more and more jobs related to the capital market such as stock brokers, stock analysts.
Read also: CAPITAL MARKET STRUCTURE IN INDONESIA
CAPITAL MARKET FUNCTION
1. The function of the capital market as an intermediary
This means that the capital market brings together those who need funds with those who have excess funds. From the lender's perspective, the party with excess funds, in this case the investor, expects to receive a reward for the funds submitted. From the side of the borrower or the party who needs funds, in this case the company, with the availability of funds from outside, it is possible for them to fund their operations. This function is called the capital market economic function.
2. The function of the capital market is to encourage the creation of an efficient allocation of funds
With the capital market, parties with excess funds (investors) can choose investment alternatives that provide the most optimal return. This function is called the financial function of the capital market.
