Investing Basics
Don’t get overwhelmed if you’re new to the world of investing. Here are some basic concepts for you to understand how investing really works and where you can find your place in it.
What is an Investment?
At its core, investing is about putting your money into something, like stocks or gold, with the expectation that it’ll be worth more than what you paid; netting you a profit.
Defining Stocks
Think of a stock as a tiny slice of a company. If you buy a stock, you’re part-owner of that company. This ownership might come with some perks like getting a cut of the profits through dividends, if the company’s doing well and feels like sharing.
How does the Stock Market work?
The stock market is where investors buy and sell listed shares of companies. It’s a set of exchanges where companies issue shares and other securities for trading. The share prices of the shares listed on the Stock Exchange fluctuate according to the buy & sell transactions taking place.
How does the Pakistan Stock Exchange (PSX) function?
The Pakistan Stock Exchange (PSX) is the primary stock exchange of Pakistan, located in Karachi, with digital access to all. PSX has more than 500 listed companies distributed amongst more than 35 sectors. There are 11 Indices listed on PSX board. Part of the PSX ecosystem are the CDC (Central Depository Company) through which delivery of shares takes place, and NCCPL (National Clearing Company of Pakistan Limited) through which settlement of shares takes place.
How does the Pakistan Mercantile Exchange (PMEX) function?
In essence, the Pakistan Mercantile Exchange (PMEX) is like a marketplace but for trading in commodities such as gold, oil, indices, currency pairs and agricultural products instead of everyday items.
PMEX is Pakistan’s first and only multi-commodity futures exchange, which is regulated by the Securities and Exchange Commission of Pakistan (SECP).
Guide to Investing on PMEX
The platform PMEX offers functions a bit differently than the stock market. The stock market deals with financial assets like company shares, whereas PMEX provides a platform where individuals and businesses can enter into futures contracts for various commodities like agricultural products, metals, energy, etc.