Companies & Markets

A company is a legal "person" separate from its founders. It can own assets, sign contracts, make a profit, and — crucially — be divided into shares of ownership. That last trick is what lets it raise money from strangers and outlive whoever started it.

Buy one share and you own a sliver of the whole business: its factories, its brand, its profits. If the company does well — paying dividends or growing — your slice is worth more. If it fails, your slice can fall to zero. That's the deal: real ownership, real risk.

A growing company needs money — for factories, staff, expansion. It can borrow it (debt) or sell ownership (equity). Selling shares brings in cash that never has to be repaid; the price is giving away a slice of future profits and control. Borrowing keeps control but must be repaid with interest.

IPO stands for Initial Public Offering. Until that day, a company is private — owned by its founders and a few investors. An IPO lets anyone buy a slice, turning private owners into public shareholders and handing the company a wall of cash to grow with.

Say a Singapore company offers 100 million shares at S$1 each. It raises S$100 million. On listing day, demand is hot and the price jumps to S$1.50 — but the company already has its cash; now investors are trading among themselves. Globally the same script runs, just with more zeros — SpaceX's 2026 listing raised US$75 billion.

An exchange is where buyers and sellers of shares meet — today almost entirely through computers. It sets fair prices, enforces rules, and makes sure trades actually happen. Singapore's is the Singapore Exchange (SGX); the giants are New York's NYSE and Nasdaq.

Behind the app is the order book — a live list of everyone wanting to buy or sell, and at what price. A matching engine pairs the highest willing buyer with the lowest willing seller in a fraction of a second. The "price" you see is simply the latest match.

After a match, the trade must clear and settle: the shares move to the buyer, the cash to the seller, with a clearing house guaranteeing neither side defaults. In Singapore the Central Depository (CDP) holds your shares; globally the giant is America's Depository Trust & Clearing Corporation (DTCC). This plumbing usually takes a day or two — "T+1" or "T+2".

You open an account with a broker — an app that connects you to the exchange. Deposit money, search a company, place an order. In Singapore, Tiger Brokers and moomoo made this cheap and easy; globally it's Interactive Brokers, Schwab and Robinhood. Fractional shares even let you buy part of one pricey share.

An index tracks a basket of companies so you can see the market's mood at a glance. Singapore's Straits Times Index (STI) follows 30 of the biggest SGX companies. America's S&P 500 (Standard & Poor's 500) follows 500 giants and is the world's most-watched scoreboard.

A fund pools many investors' money to buy lots of shares at once. An ETF (exchange-traded fund) is a fund you can buy on the exchange like a single share. One purchase of an S&P 500 ETF makes you a part-owner of 500 companies — instant diversification, tiny fees. Diversification is how you protect wealth — though, as Part 5 shows, big fortunes are first made through concentration.

Crypto trades on its own exchanges (like Binance or Coinbase), 24/7, with no closing bell. Prices can swing double digits in a day. Unlike SGX, there's usually no central clearing house and far lighter rules — more freedom, but far more risk.