Equity Capital Market (Initial Public Offering/IPO)

Shares represent ownership of ordinary shares in a company. Companies issue shares because they want to raise money for their business  operations. Investors buy shares because they want to earn a return on their investment, either through dividends or through a capital gain.

Buying a share, however, is very different from buying a real asset, such as land or buildings, machines or knowledge that can be used as goods and services. Buying shares is buying a financial asset, whereby the asset bought is merely a claim on real assets or income generated by a company. In fact, equity holders are not promised any particular payment except for a right to dividend when declared and voting rights. If a company is successful in its earnings performance, the value of the share of the company rises, and the shareholder will earn a capital gain on the share as a result; if not, the share declines and the shareholder may incur losses.

Debt Capital Market (Bonds)

The money and debt securities markets are markets for short-term and long- term debt instruments. Their main function is to intermediate between the providers of capital (investors and savers) and the user of capital (corporations and government). Generally, debt instruments perform well during stable economic conditions and low inflation environments.

Right Issue

Rights issue applied to the privilege granted to the shareholders to acquire additional shares directly from the issuing company.

To raise capital through the issuance of additional ordinary shares, a company may offer each shareholder the right to buy shares in direct proportion to the number of shares already owned. For example, the offer may be based on the right to buy one additional share for each ten shares held. The subscription price for the new shares is usually lower than the current market price. This induces the shareholders to take up the rights issue