Factors that affect Share Prices

If you’re into share dealing, you must understand all the factors that affect share prices so you can maximise your earnings.

16:28 12 March 2013

The stock market is anything but simple. There are so many things that investors need to know so they can somehow predict how their stocks or shares will move in a given period of time. 

Below are some of these factors: 

 

• Dividend effect. If you’re new to share dealing, you must know that more often than not, shares of a particular company go down during dividend giving season. For example, if a company decides to give £5 dividend per share, you can expect that the share price will also drop by £5. 

 

• Bonus issue. Some companies decide to offer additional shares to existing shareholders. Through this, the company can reinvest the dividend cash for more earnings growth. Usually, the stock price drops the same ratio of bonus issued. 

 

• Warrants exercise. With warrants, shareholders acquire the right to buy shares after the exercise date. The earnings will then be diluted as more shares are sharing the same earning pie. Usually, the stock price goes down the same proportion of the number exercised shares.