Stock Market Efficiency and Capital market during Covid -19 Panademic

I learned about stock market efficiency and capital markets throughout my studies at the University of Northumbria. Since this is a pandemic situation, I'd want to share my knowledge and my experience of investing shares in the Colombo stock exchange with you by this blog.

Share market investors may be concerned about a share market collapse during the COVID-19 pandemic, in which share prices may decrease. As a consequence, people may contemplate selling their shares in order to prevent incurring more investment losses. However, there are dangers associated with any share investment since no one can predict what will happen in the share market, especially with the present pandemic and likely continued lockdowns. Due to the constantly shifting outlook, investors should brace themselves for a bumpy ride while waiting for the projected V-shaped rebound. Because savings interest rates are so low, the stock market provides the greatest opportunity to increase wealth.

Many individuals are still debating whether or not to purchase stock at this time. Investors want to know the 'real colors' of stocks. When investors purchase a firm's shares, they become owners of a portion of the company. They are awarded by gains in the firm's share price and periodical payments made by the company to shareholders, known as share dividends. Shares, on the other hand, may generate either enormous profits or substantial losses by their performance. Shares are suitable to investors who can tolerate substantial instability in the value of the stocks in the near term while aiming for larger long-term returns.

 

T       During the present epidemic, investors should use extreme caution while contemplating stock trading. First, shareholders should not panic or be swayed by unfavorable news, which may tempt them to sell stocks and instead keep the cash. Instead of selling, shareholders should contemplate the possibility of a rebound, given that the stocks have been already acquired. The persistent uncertainty around the COVID-19 pandemic is said to have exacerbated ongoing stock market performance; as a result, investors who stay in the market may gain from long-run returns. The second strategy for cost-effective reducing risk is diversification. It is possible to do this through holding stock in a variety of businesses, nations, risk levels, and several other investments kinds such as securities and real estate.

Third, investors should use caution while selecting stocks. One tried-and-true method is to look for firms with robust financial sheets and business strategies that are not affected by the economic cycle. This method will ensure that dividends are disbursed to investors. Investors should also select firms that have the potential for long-term fundamental transformations, such as energy and technology. Fourth, investors should look for high-quality firms whose stocks have been adversely affected by the epidemic. They might profit by purchasing discounted stocks in such firms, which are projected to thrive once the economy recovers

 Suppose share market investments are not a top concern during the present epidemic. In that case, investors might explore alternative financial assets such as cash and fixed-income investments, unit trust funds, and real estate. Cash and fixed-interest investments, such as bank deposits and fixed deposits, are seen to be low-risk. However, they often provide low income, and depreciation may erode the value of such assets over time.

However, unit trust funds are an excellent alternative for those who are new to investing. They let people begin investing with a minimum amount of cash, quickly increase their investment and diversify their investment to reduce risk. Property is another famous investment option for Sri Lankans. As property values rise, investors may profit from continual gains in the worth of their capital, as well as rental income from residents. Property investors, like stock traders, should evaluate a variety of criteria. Property investing is seen as a long-term investment best suited for investors who do not need immediate access to money from their investment.

In general, the rules for stock investment have not altered due to the COVID-19 epidemic. Investors may continue to buy shares in deserving firms and hold them for long-term gains. However, in order to develop a successful long-term strategy, investors may need to be persistent and risk-averse.