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Assets Under Management (AUM) is a measurement of the total market value of the assets that a financial institution or investment company manages on behalf of investors.
The term BAT stocks refers to the shares of Chinese internet companies Baidu, Alibaba, and Tencent.
A bear market refers to a sustained period of time during which securities prices are falling, causing widespread pessimism among investors – leading them to sell their securities, which in turn makes prices fall further.
A blockchain is a continuous digital ledger that records transaction data, contracts and other information on a secure, decentralised public network of peer-to-peer computers known as nodes. When a new transaction is made on the blockchain, a majority of nodes approve and validate it. The validated transaction is then time-stamped and becomes a new block on the chain that is distributed and stored across the network of nodes. This provides a permanent, transparent record of the transaction. Blockchain technology has a number of practical applications. It is the foundation on which crytocurrencies such as bitcoin, litecoin and ethereum are built on, the latter of which is embedding the technology into smart contracts known as initial coin offerings (ICOs).
Also referred to as Brent Blend, Brent Crude is a type of sweet crude oil sourced from the North Sea, which is used as a benchmark for the prices of oil contracts, futures, and derivatives worldwide. Brent crude accounts for more than half of the globally-traded supply of crude oil.
A bull market is a financial market in which asset prices are consistently rising in value over an extended period of time. The term typically refers to a stock market, but may be also used to describe bonds, commodities, currencies, real estate, and other assets that are traded.
The opposite of a bull market is a bear market, in which asset prices are consistently in a downward trend.
A cryptocurrency is a digital currency which utilises encryption techniques for security and anti-counterfeiting purposes – to regulate the creation of new units of currency and ensure smooth and secure transactions. Cryptocurrencies are decentralised, operating independent of central banks.
The opposite of investment, divestment (also known as divestiture) refers to the act of selling off an asset – such as a stock, property, or business – to achieve financial, social, or political objectives.
Dividends are the share of after-tax profits and retained earnings that a company distributes to shareholders. The amount and timing of distribution is decided by the board of directors, who typically retain sufficient cash reserves for the projected operating and capital needs of the company.
Invented by Charles Dow – a financial journalist and founder of The Wall Street Journal – in 1896, the Dow Jones Industrial Average (DJIA) is a price-weighted stock market index that is based on the average value of 30 large, industrial US companies traded on the New York Stock Exchange and Nasdaq. The Dow Jones Industrial Average is widely seen as a leading indicator of the overall condition of the US stock market and economy.
Electronic commerce (e-commerce) is a type of business that involves the buying or selling of goods and services via the internet.
An emerging market is a term used to describe the economy of a country that is developing through robust, rapid growth and industrialization, and is in the process of transforming into advanced economy. An emerging market nation typically has some form of market exchange and regulatory body as well as a single currency and overarching banking infrastructure. Emerging markets offer investors higher potential returns, but carry higher risks due to the possibility of stock market volatility, political upheaval, currency fluctuations, and regulatory changes.
Exchange traded funds (ETFs) are securities that track a particular index (such as the S&P 500 or the Nasdaq), sector, commodity, bond, or group of stocks. ETFs are similar in structure to mutual funds as investors own shares of the ETF and do not directly own the fund’s underlying assets. ETFs are different from mutual funds in that they are listed and traded on exchanges just like stocks. ETFs also typically have lower fees than mutual funds.
Coined by CNBC commentator Jim Cramer, the term FANG stocks refers to the shares of tech companies Facebook, Amazon, Netflix, and Google.
A fixed income security is an investment that delivers returns in the form of regular payments on a pre-determined schedule and repayments of the principal amount upon maturity. In essence, a fixed income security is a loan made by an investor to a government or corporation to finance their operations. Examples of fixed income securities include corporate and government bonds, Treasury bills, and money market instruments.
Frontier markets are markets in countries that are less economically developed and mature than emerging market countries. Frontier markets typically have lower market capitalisation and less liquidity than emerging markets. Although frontier markets give investors the opportunity to reap potentially high returns, they can also expose investors to significant risks.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (KLCI) is a benchmark index made up of the 30 biggest companies – in terms of market capitalisaton – trading on the Bursa Malaysia stock market.
Gross domestic product (GDP) is the total value of all the goods and services produced by a single country within a certain time period. Typically calculated on an annual or quarterly basis, GDP is a measurement of a country’s overall economic activity and an indicator of its economic health.
Hammer price refers to the price offered as the winning bid for an item sold at an auction. The hammer price is the price the auctioneer announces when the hammer falls, but is not the final sales price – which may include a buyer’s premium, sales tax, and other charges.
The Hang Seng Index (HSI) is a market capitalisation-weighted index comprising the 40 largest companies on the Hong Kong Exchange. The HSI is widely considered a barometer of the overall market performance in Hong Kong.
A hedge fund is an alternative investment vehicle through which capital from accredited individuals or institutions is pooled into a limited partnership and invested in a wide range of assets with the aim of generating high returns and mitigating risk.
High net worth (UHNW) individuals are defined as those with at least US$1 million in investable assets – excluding personal assets such as residential property, collectibles, and consumer durables.
A term used to describe a company whose income outweighs its expenses, or more generally, is financially solvent. Its name is derived from the common practice of accountants using black ink (as opposed to red ink) to denote positive figures in financial statements.
A term generally used to describe a company that is generating a net loss or is in debt. The opposite of being “In the Black”, its name is derived from the common practice of accountants using red ink to denote losses or debt in financial statements.
An index fund is a passive investment vehicle designed to track the performance of a particular stock market index, such as the Dow Jones or S&P 500. In theory, this is achieved by constructing a fund portfolio that is comprised of the underlying basket of stocks that are included in that index.
An initial public offering (IPO), also known as “going public”, refers to the first time a private company offers its stock for sale to the public on a stock exchange. IPOs are typically IPO to get an influx of cash to finance growth. In order to initiate the IPO process, the issuing company must first engage an underwriting firm to help determine the amount and type of securities to issue, the optimal offering price, and the right time to launch the IPO.
The interest rate is the proportion of a loan charged by a lender to a borrower, typically expressed as a percentage of the sum borrowed. The interest rate usually refers to the amount being paid by the borrower on a yearly basis – known as the annual percentage rate (APR).
The Jakarta Composite Index (JCI) is a benchmark, capitalisation-weighted index made up of all of the stocks listed on the Indonesia Stock Exchange.
The Korean Composite Stock Price Indexes (KOSPI) is a group of indexes that track the overall performance of the Korean Stock Exchange. The most widely-recognised KOSPI index is the benchmark KOSPI 200, which is made up of the 200 biggest publicly-traded companies on the exchange.
Market capitalisation (also known as “market cap”) is the value of a company’s outstanding shares on the stock market. You can calculate the market capitalisation of a company by multiplying the total number of shares outstanding by the company’s current stock price.
A market correction occurs when a stock market drops more than 10%. Market corrections, which can happen in any asset class, are typically temporary price declines that halt an upward trend in prices.
MSCI is a US-based financial services company that specialises in providing equity, fixed income, and hedge fund stock indexes. More than 900 exchange-traded funds are based on MSCI indexes. The most widely known MSCI indexes are the MSCI World Index and MSCI Emerging Markets Index.
Nasdaq is an American securities marketplace that – when it was founded by the National Association of Securities Dealers in 1971 – was the world’s first electronic stock market. The Nasdaq Composite is an index that covers the more than 3,000 companies listed on the Nasdaq stock exchange, including leading tech companies such as Apple, Google, Amazon, Microsoft, and Intel.
Located on Wall Street in New York City, the New York Stock Exchange (commonly abbreviated NYSE) is the biggest stock exchange in the world in terms of the total market capitalisation of its listed securities – which totalled US$21.3 trillion as of June 2017.
The Nikkei 225 – commonly referred to as the Nikkei – is a price-weighted, benchmark stock index, made up of 225 blue-chip companies traded on the Tokyo Stock Exchange. The Nikkei 225 has been calculated since 1950.
Options are derivatives contract which provide the buyer the right, but not an obligation, to buy (call) or sell (put) a specific financial asset at an agreed upon price (strike price) and date (expiry). There are two types of option contracts; American options can be exercised at any time whereas European options can only be exercised on their expiry date.
The stock price an investment analyst predicts a stock would rise (or fall) to is known as the “Price Target.” Various valuation models are used, but typically an analyst bases this opinion on factors that include the strength of the company’s balance sheet, profit projections, management strategy, risk considerations as well as technical indicators. This leads to a difference and range price targets from one analyst to another.
Private banking refers to customized banking, investment, and other financial services offered by financial institutions to high net worth (HNW) individuals.
A real estate investment trust (REIT) is a company that owns and typically operates a portfolio of income-producing, commercial and residential real estate. The assets owned by a REIT may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.
REITs provide an investment structure similar to mutual funds, through which individual investors can earn income through real estate ownership – without having to directly purchase the properties themselves.
Return on Investment (ROI) is a measurement of the gain or loss generated by a particular investment relative to the investment’s cost. ROI is typically expressed as a percentage, and can be calculated by dividing the profit made from an investment by its cost.
Robo-advisors are automated, algorithm-driven financial advisors that offer financial advice and portfolio management with little or no human intervention.
The Standard & Poor’s 500 Index (typically abbreviated as the “S&P 500”) is a stock market index that tracks the value of the 500 largest corporations – in terms of market capitalisation – on the New York Stock Exchange and Nasdaq Composite Index. Widely seen as an accurate barometer of the performance of the entire US stock market and economy, the S&P 500 is made up of a basket of companies selected by the S&P Index Committee based on three main factors: their market size, liquidity, and sector.
A safe haven asset is an investment that typically retains or even increases its value during periods of market turbulence. Gold, the US dollar, US Treasury bills, the Swiss franc, the Japanese yen, and bonds are all widely considered to be safe haven assets.
Short selling – also known as “shorting” – is the practice of borrowing a security from an existing owner, subsequently selling that security at the prevailing market price, and pocketing the proceeds of the sale. If the price of the security declines, the short seller profits as he/she is able to buy back the security from the original owner at a lower price and keep the difference.
A stock market bubble occurs when prices for stocks rise far above their intrinsic value, driven by investor enthusiasm. Typically the bubble bursts when investors realise the value of those stocks is inflated, leading to a massive sell off of shares and a sudden and sharp decline in prices.
The Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) tracks the performance of all stocks listed on the Taiwan Stock Exchange (TWSE). Created in 1967, the TAIEX index is widely considered to be a benchmark and a barometer for the Taiwan securities market.
Ultra high net worth (UHNW) individuals are defined as those with at least US$30 million in investable assets – excluding personal assets such as residential property, collectibles, and consumer durables.
The term “unicorn” in finance refers to a startup company that is valued at over US$1 billion.
West Texas Intermediate (WTI) is a grade of crude oil that is commonly used as a benchmark (along with Brent and Dubai/Oman) to determine oil pricing. WTI is the underlying asset of the New York Mercantile Exchange’s oil futures contracts.