Category: Money Tips Date: 2006-08-12
"Turnover" also called "turnover rate" refers to a certain period of time the stock market, resale trading frequency and liquidity of the stock to reflect the strength of one of the indicators. Its calculation formula is:
Turnover = turnover within a certain period of time / number of shares * 100%
For example, a stock within one month of the 2000 shares traded, while the total capital stock of 100 million shares, then the stock in this month's turnover of 20%. In China, the stock is divided into the circulation in the secondary market and non-public shares in circulation in the secondary market, state shares and legal person shares in two parts, the general only negotiable part of the calculation of turnover of the stock in order to more realistic and accurate to reflect the stock's liquidity. By this method of calculation, in this case the flow of capital that stock if it is 20 million, its turnover of up to 100%. In foreign countries, usually with a turnover period of time with a point on the ratio between the market value to calculate the turnover rate.
The level of turnover tend to mean that such situations:
(1) The higher the stock turnover means that the more active trading in stocks, people will buy the stock the higher the stocks are hot; the other hand, the lower the stock turnover, it shows that the only few people are concerned about the stock belonging to unpopular stocks.
(2) high turnover usually means that stock liquidity is good, and out of the market easier, does not appear to buy can not buy, to sell the phenomenon is not sold and has strong liquidity. It is worth noting, however, is that high turnover stocks, often the object of pursuit of short-term funds, speculative strong, stock prices fluctuated considerably, the risk is also relatively large.
(3) The combination of turnover and stock price movements, you can make certain future stock price forecasts and judgments. Turnover of a stock's sudden rise in volume amplification, may mean that there are a large number of investors buying the stock likely will follow up. If a stock continued to rise for a period of time, turnover has increased rapidly, it may mean that those who want to cash in some profits, stock prices may fall.
In general, emerging markets, turnover is higher than the mature markets of the turnover. The fundamental reason is that the size of expansion in emerging markets quickly, the new listed stocks higher, coupled with investors, investment philosophy is not strong, so that more active trading in emerging markets. The level of turnover also depends on the following factors:
(1) transaction. Of trading stock market has experienced verbal singing is reported that bidding on the boards, computer matching, large-scale computer matching, etc. from manual focus to the computer at all stages. With more and more advanced technical means and technical capabilities increasingly powerful, the market volume, trading potential of the growing expansion of turnover also will be raised greatly.
(2) The settlement period. In general, the shorter settlement period, the higher turnover.
(3) investor structure. To individual investors as the main body of the securities market, turnover is often high; to funds and other institutional investors as the main body of the securities market, turnover is relatively low.
