In countries with low economic, social and political development, the establishment of a stock market is a very complicated situation, since the lack of consolidation of industries and large-capacity companies in the market does not give the necessary measure to implement it, strengthen it and make it enduring.
The stock exchange is a periodic and permanent meeting of people who want to carry out transactions whose object is not under the sight of the parties, unlike the market, in which the product that will be subject is submitted to the buyer's view transaction.
The economic function of the stock markets lies in the meeting of sellers and buyers, giving them the pertinent information on the evolution of supply and demand, also ensuring the correctness of transactions, this leads to the economic actors of the companies providing the tools necessary for the free exchange of products and factors, thus strengthening and underpinning integrated development between the market and organizations.
As can be seen, the existence of the stock market supposes the absence of state management, and the existence of a market in which supply and demand can freely combine.
Definition:
Specular is any commercial operation that seeks to obtain a profit in the short term.
These characteristics of the stock exchanges suppose a great participation of different protagonists who, due to their essence, seek a very short-term profit, for this reason it is assumed that, like inflation, speculation is a phenomenon that has existed from time immemorial. Its best definition can be considered as a source of profit based on variations in the price of the same object. Speculation can bring aspects that do not benefit the development of the stock market, the following aspects are considered in this sense.
Negative aspects of speculation
- Speculation is uncertain and inaccurate and, therefore, can accentuate and not correct price differences. It can degenerate in game (when the forecast is replaced by "intuition" or "hunch"), in exhaustion the speculator tends to provoke artificially the rise and fall of prices and hoarding as a constitution of a market monopoly that allows price manipulation.
Within the implementation of a stock market, sequels may arise that would result in the rapid entry of speculative agents that in some way could benefit or harm the system itself.
But in speculation not everything is flaws, there may be positive aspects that in one way or another can help an increase in the productive factors of society.
Positive aspects of speculation
- It can have a regulatory action of supply and demand as well as prices. As F. Baudhuin indicates, »the speculator buys when prices have fallen due to weak demand (so) it drives… the latter and causes the prices to recover. Sell in the opposite case, making the offer more abundant, and act (then) in the sense of lowering prices. Reduces misuse and waste when there is overabundance; scarcity decreases in times of hardship. It is, therefore, a steering wheel for the economic machinery. ”Capital market support. It presses on production and stimulates the spirit of initiative and creativity.
The stock market is very important in the consolidation of the financial structure of a country, therefore it is necessary to look for the correct alternatives and tools to facilitate the implementation of a concrete plan to strengthen the basic structures of supply and demand.
