Educational articles

How Higher Oil Prices Affect the Share Market

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Higher oil prices can affect some parts of the share market more than others. However, we don’t see oil prices rising so much due to the Iran/Israel conflict as to have an overall negative effect. Despite this, it is worth revisiting how different sectors can be impacted by increasing oil prices. Here’s a breakdown of how and why oil price increases influence stock markets:  Winners: Energy and Commodities Companies in oil exploration, drilling, refining, and services tend to benefit from …

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Why a capital raising may cause the share price to decrease

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Capital raisings may cause share prices to decrease for several core reasons, primarily tied to dilution, valuation concerns, and investor sentiment. Here’s a clear breakdown:  Dilution of Ownership When a company issues new shares to raise money: Each existing shareholder owns a smaller percentage of the company. Unless the capital raised leads to proportionate earnings growth, earnings per share (EPS) will decline. This dilution lowers the value per share, even if the company’s total value (market cap) increases. Shares Offered …

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What is deflation?

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Deflation is an economic term that refers to a general decline in the prices of goods and services over a period of time. It is the opposite of inflation, which is the rise in prices. Causes of Deflation: Decrease in consumer demand – When people spend less, businesses lower prices to attract buyers. Deflation causes people to hoard money and put off spending it. When the general level of prices is falling, people will think about buying goods later believing …

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What are the riskiest sectors in the stock market?

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The riskiest sectors in the stock market are typically those characterized by high volatility, sensitivity to economic cycles, regulatory changes, and speculative investor behaviour. These sectors can experience significant price swings, presenting both opportunities and challenges for investors. Most Volatile Sectors Information Technology  Why it’s risky: Tech stocks are known for their rapid growth potential but also for their susceptibility to market sentiment shifts, regulatory scrutiny, and innovation cycles. Despite challenges, the tech sector has shown resilience, with companies leveraging …

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6 characteristics of an asset bubble

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An asset bubble is when the price of an asset—like real estate, stocks, or cryptocurrencies—rises far above its intrinsic value, driven by excessive demand, speculation, and investor hype, rather than fundamentals like earnings or cash flow. Key Features of an Asset Bubble: 1.Rapid Price Increases Prices soar much faster than historical trends or what fundamentals justify. 2.Speculative Buying Investors buy purely because they believe prices will keep rising—not because the asset is actually worth more. 3.”This Time Is Different” Thinking …

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