When it comes to trading equities, investors do not understand why when they want to sell their shares at a price lower than the price the shares are trading on the exchange, their shares are not sold. It is no news since almost every emotional investor in times like this will want to sell their shares.
As a result of COVID_19, investors around the world have resorted to selling their shares. Stock markets have made huge loses as companies shut down operations.
Statistics as at April 1, 2020.
‘The Dow Jones Industrial Average and London’s FTSE 100 saw their biggest
quarterly drops since 1987, plunging 23% and 25% respectively’.
‘The S&P 500 lost 20% during the quarter, its worst since 2008’.
‘In the US, one central bank analysis suggested the unemployment rate could
rise to more than 32% over the next three months, as more than 47 million
people lose their jobs’.
Source: BBC
Just a few statistics for us to understand what is really happening around the world. All investors are moved by information. When the information is to the advantage of the investors, they tend to buy more or do more investment to harvest their profits on the information. On the other hand, negative information does affect the investment decisions than a positive one. This is as a result of the emotions investors attach to their investment.
The novel covid_19, a pandemic that has hit the global space has caused lots of investors (equity) to sell their shares at a relatively lower price.
It should be noted that, even as we are all trying to sell off our shares because we are worried, the investment banks or firms have ethics as far as buying and selling of shares are concerned. They have an obligation to ensure that they don’t ‘crash’ the market.
Basically, what this means is that, for instance, I placed an order to sell my MTN shares at 66 pesewas while it was trading at 68 pesewas. For almost 3 weeks now, my shares have not been sold though trading is still ongoing. My brokers didn’t execute my order because when they do, lots of people will also sell their shares at a lower price which will eventually ‘crash’ the market.
It should be noted that the fact that you place an order to sell your investment at a lower price does not mean you will have your money in your account soon. The stock market has ethical guides on ‘buy and sell’ and in times like this, your order will not be executed on your terms.
Source thefinancefocus.com
Kenneth Adu
Contact 0248556177
Thanks for that piece