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Recently, there has been a lot of talk regarding China’s stock market and economy. China’s economy has been in a steady period of growth for years and now things are changing, which has caused people to be in a uproar. During the first week of trading in 2016, China’s stock market plummeted. It caused many concerns for people around the world. It made people think, what is going on? Is China going into a Recession? One of the reasons for this issue is that China installed market-wide circuit breakers into their stock markets. Circuit breakers are used to put a halt on trading when prices taking a significant drop. Once this occurs the whole training day closes. The circuit breakers have not been beneficial to the Chinese stock market so far in 2016.
Many people are concerned about China going into a recession. It is definitely normal for one to think this because of all that is going on right now. However, the answer is still unknown but the GDP growth rate is still not concerning yet. In 2015, the GDP growth rate was around 7% and it is looking to be 6-7% in 2016. However, some economists feel it will be about 3% in 2016, but this not mean they will be in recession discussion.
There are also some people who believe that some of the growth figures are lower than what the government is saying, which has led a spark for concern. Another important issue is that on Tuesday Monthly Industrial Production and Retail sales for China were released and with December numbers in coming worse than most people anticipated.
According to Kenneth Kim, a contributor who writes about markets and economy, believes that the United States does not heavily depend on China’s economy. He believes that the amount of sales that U.S has in China represent a small size our GDP, which is an interesting assessment. Only time will tell on the outcome on China’s economic dilemma.
What is a stock ?
A stock is a share in the ownership of a company. Once you have a share within a company you then take ownership of the company’s assets and earnings. The more stock you take within a company your equity becomes greater.
Stocks are also a limited liability. This means if the company is not able to pay their debts, you will not be be liable to fix this issue. There are companies that are in charge of this if this issue were to occur and they are known as partnerships. When you own a stock, you lose whatever you invest into it.
What is an IPO?
IPO (Initial Public Offering) – According to investopedia an IPO is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
Risk in Stocks
There are risks in investing individual stocks. For all you people who are new to the stock market, NOTHING is guaranteed. Any stock can go bankrupt, so if you buy a share and that company goes bankrupt, then your stock is worth nothing.
There are two ways for someone to purchase a stock and first way is to use a Brokerage Firm. For a full-service brokerage firm your pockets may hurt after, but you will be receiving quality advice from professionals to manage your account. For discount brokerage firms, you will not receive as much quality service but it is cheaper. So in the end, it all really comes down to how much you looking to spend. Another way to purchase stocks are Dividend reinvestment plans and direct investment plans. These plans allow shareholders to purchase stock directly from the company, which for many can be more of an easier option.
For more information, please check out: http://www.investopedia.com/university/stocks/stocks1.asp