Equities

Equity, are securities that represent a company's capital and grant certain rights to their holders. Investors seize the opportunity to benefit from the company's growth and profit by purchasing these securities. They may also have advantages such as participating in general assemblies, voting, and receiving dividends.

As Yapı Kredi Invest, within the scope of investment services we offer, we support you in taking advantage of opportunities in stock markets. In this direction, we provide comprehensive analysis, research and consultancy services so that investors can make informed decisions.

What is Equity?

Equity, also known as stock or company stock, is an investment instrument that represents the partnership stock of a business and grants various rights to the investor. The equity holder can receive profit (dividend) as a partner in the company's growth.

In financial markets, equities are dynamic products priced according to supply and demand. In addition to company activities, economic and sectoral developments also affect these prices. While offering the potential of participating in the long-term value increase of the business, it also creates the opportunity to obtain trading gains through price fluctuations in the short term.

How to Buy Equities?

The equity purchase process begins with opening an investment account first. After opening an investment account, you can start equity transactions. To place a buy order, you need to have cash in your account to cover the transaction amount, and to place a sell order, you need to have the equities subject to sale in your account. You can also transfer your equities held in different institution or institutions to your opened account and continue your transactions. As long as buy and sell orders are not executed, price and quantity changes can be made or cancelled within the framework of equity exchange rules. Executed orders are reflected in your portfolio's equity and balance. In accordance with equity exchange rules, you can continue buy and sell transactions without waiting for the settlement day (T+2). All transactions carried out on the equity exchange are conducted within the framework of legal regulations and under the supervision of the Capital Markets Board.

How to Make Equity Investment?

Equity investment should be planned in line with correct analysis methods and investment strategies. With the fundamental analysis method, companies' financial statements, revenues, debts and sector dynamics are examined to evaluate medium-long term potential.

In technical analysis methods, price charts, indicators and trends are taken into consideration. Portfolio diversification is important when determining investment strategies; selecting equities from different sectors helps balance risks. Additionally, regular market monitoring, following economic developments and correct interpretation of macroeconomic data are required.

How Do Equity Markets Work?

Equity exchanges are organized markets where securities (equities, bonds, bills, etc.) are bought and sold. While Borsa Istanbul (BIST) undertakes this task in Turkey, similar equity exchanges operate in different regions of the world. During trading hours, investors can buy and sell equities by placing orders.

All companies trading on equity exchanges try to ensure transparency by disclosing financial reports at certain intervals. equity markets are actively followed by large investment funds, banks, individual investors and institutional investors, and transactions are continuously priced according to supply-demand balance.

What are the Types of Equities?

The most common equity types are:

• Ordinary Stock: Standard stocks that provide voting rights to investors and can receive dividends.
• Preferred Stock: A type of stock that grants privileges such as additional voting rights or dividend priority to its holders.
• Rights Stock: Stocks newly issued during the company's capital increase and requiring additional payment from investors.
• Bonus Stock: Stocks that the company distributes to investors without demanding payment by using its profit reserves or capital adjustment differences.

What are the Factors Affecting Equity Value?

The main factors affecting equity value are:

• Company Performance: Indicators such as revenue, profitability and management quality.
• Economic Indicators: Macroeconomic factors such as interest rates, inflation and growth data.
• Sector Dynamics: Competition conditions, new technologies and regulations.
• Global Developments: Fluctuations created by international political and economic developments.

How Does the Company's Financial Condition Affect Equity Prices?

Balance sheet analysis and the company's profitability indicators play a critical role in the market value of the equity. Equities of companies that are well managed, achieve stable profit growth and have strong equity structure are generally in higher demand by investors. As company profitability increases, the amount of dividends to be paid in the future may also increase; this increases the attractiveness of the equity.

How Do Economic Developments Affect Equities?

Macro factors such as interest rates, economic growth and central bank policies have a direct impact on equity prices. When interest rates rise, investors may turn to safer and fixed-return instruments. This situation may cause equity prices to fall by reducing demand on the equity exchange.

During economic growth periods, company profitability generally increases and the general atmosphere of the market becomes optimistic. Since central bank policies also affect indicators such as money supply, interest, inflation, they shape investors' risk appetite and equity demand.

How to Obtain Profit from Equities?

Equity return can be in the form of dividend income and capital gains. Dividend income enables the investor to obtain cash or additional equities at regular intervals through the stock distributed from the company's profit. Capital gain is the profit obtained by buying the equity at a lower price and selling it at a higher price.

What is Dividend and How is it Calculated?

Dividend refers to the distribution of a company's periodic profits to its shareholders. Dividend calculation is generally based on the company's total profit and dividend policy. The dividend is paid to the investor in total by multiplying the amount allocated to each stock by the dividend yield ratio.

How is Taxation Done in Equity Trading?

Equity tax is handled within the scope of investment taxation. In Turkey, subject to certain conditions, the withholding rate on equity gains can generally remain at low levels. Those who are subject to corporate tax are subject to different tax regulations. The withholding rate may vary according to income level or investor type. Click for detailed information.

What are the Risks in Equity Investment?

The main risks frequently encountered are:

• Market Risk: Rapid change in prices due to economic or political developments.
• Company Risk: Value loss experienced as a result of the company whose equity was purchased going bankrupt or not being able to make profit.
• Liquidity Risk: Not being able to find buyers when urgent sale is needed or having to trade at low prices.
• Volatility: High price fluctuations, experiencing sudden rises and falls.

What Does Volatility in Equity Prices Mean?

Volatility, also called market volatility, expresses how much equity prices fluctuate within a certain period of time. High volatility means that the probability of seeing sharp fluctuations in a short time is high. This situation may cause investors to experience major losses as well as catch high return opportunities.

Low volatility indicates an environment where prices move more stably and fluctuation remains limited. Volatility can constantly change according to market sentiment, economic and political developments, company news and investors' risk appetite.

What are Risk Protection Methods in Equity Investments?

Making diversification by selecting equities from different sectors and geographies reduces dependence on a single equity or sector. Within the scope of hedging, namely risk protection strategies, measures can be taken against downside risk by using option or futures contracts.

Which Analysis Methods are Used for Equity Investment?

Equity analysis is carried out with two main approaches: fundamental analysis and technical analysis. While fundamental analysis examines the company's financial statements, growth potential and sector trends; technical analysis is based on price movements and chart formations. It is possible for each investor to use one or both of these methods according to their risk-taking situation, investment period and knowledge level.

What is Technical Analysis and How is it Used in Equity Investment?

Technical analysis tries to predict future trends by examining past market data such as equity prices and trading volumes. Trend analysis, support-resistance levels, chart reading and moving averages are among the basic tools of this method.

What is Fundamental Analysis and How is it Used in Equity Selection?

Fundamental analysis manages the equity valuation process by focusing on the company's financial statements (balance sheet analysis, income statement), activity reports and economic indicators. Investors examine the company's cash flow, debt ratios and the general outlook of the sector. Then, long-term potential is analyzed by taking macroeconomic factors and sector trends into consideration.

What are the Common Mistakes Made in Equity Investment?

The main mistakes frequently made are:

• Not Following the Market: Wrong positions can be taken when economic developments and company news are ignored.
• Making Emotional Decisions: Panic sales or overly enthusiastic purchases can lead to significant opportunities or losses.
• Not Diversifying the Portfolio: Investing all capital in a single company increases equity risks.
• Not Making Long-Term Plans: Missing fundamental values by focusing too much on short-term fluctuations.

What is the Relationship Between Equity Exchange Indices and Equities?

Equity exchange indices are indicators that measure the performance of a certain group of equities trading on the equity exchange. Indices such as BIST 100, Dow Jones and S&P 500 are used by investors to follow the general trend of the market. Equities of companies included in indices are directly or indirectly affected by the movements of these indices.