Impact of Global Conflict

This week’s article seeks to discuss some potential effects of global conflict on the local securities market. Globalisation has led to the international community becoming quite interconnected. This interconnectedness has increased contagion risks. Contagion refers to a situation where a shock in a particular economy or region spreads out and affects others. With the global economy recovering from the impact of the COVID-19 pandemic, the conflict between Russia and Ukraine has been causing knock-on effects throughout the world. The distribution and cost of oil have been greatly impacted and the conflict has also fueled the weakening of Russia's and Ukraine's financial markets. There is also the risk of the entire European financial market being affected.

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Equity Valuations

Before investing, it is important to understand the value of a stock and whether it is worth your investment. The stock’s value is the price that you are willing to pay for part ownership of a company. Equity valuation is a methodology which is utilised for deriving the fair value of a firm or its equity stock. If the estimated value:

  • exceeds the market price, the analyst infers the security is undervalued.
  • equals the market price, the analyst infers the security is fairly valued.
  • is less than the market price, the analyst infers the security is overvalued

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COVID 19 and the Local Securities Industry

At the onset of the Coronavirus (“COVID-19”) pandemic, the Trinidad and Tobago Securities and Exchange Commission (TTSEC) began monitoring the impact of COVID 19 on the local securities market. In this article, we will examine the performance of our local Equities and Collective Investment Schemes (CIS) markets for the year 2021, after almost two years of responding to the effects of the pandemic.

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What is Capital and Regulatory Capital?

In business terms, capital typically refers to the financial resources a company utilizes to fund its operations. Financial resources are however, not limited to only cash. Rather, it refers to the assets held on an entity’s balance sheet and include cash, cash equivalents, property, and buildings among other assets. Capital is used by companies in their continued production of goods and services to generate wealth for the company. Therefore, when one speaks of raising capital, this refers to a company issuing debt or equity in exchange for cash that would be channelled into production of its goods and/or services.

While there are many types of capital, in finance and economics, there are three basic categories. These three categories of capital are Debt Capital, Equity Capital, and Working Capital. Debt

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In this concluding article, focused on how bias affects our financial decisions, we delve deeper into the psychological aspect of financial decision-making. Last week we introduced the concept of ‘cognitive and emotional biases,’ and their dangers. We also introduced four different kinds of biases that are commonly exhibited when making financial decisions. If you missed part 1 of this feature, be sure to check it out via our corporate website

Today, we will look at four more kinds of biases. First, let’s start by looking at two more cognitive biases – biases which affect the way individuals process information – framing and mental accounting.

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