Fundamental analysis of shares

Of all these variables that are part of fundamental analysis it is necessary to emphasize two factors. On one side are interest rates, are one of the fundamental to be considered in the analysis of financial markets and securities position, its effects on the economy and markets have great influence or significance variables. Thus, its effect on stock markets materializes as follows:


      1. First, cyclical variations in interest rates need not cause effects on the markets, since its main impacts occur before long-term variations in interest rates.
      2. Consecutive changes in interest rates upward involve average drop within the bags.
      3. Declines in interest rates discourage investment in bank deposits and new issues of fixed income assets, directing the funds from investors to the stock markets, and encouraging investment and entrepreneurship, increasing disposable income and reducing the indebtedness of companies and households. Consequently this favors investment and consumption and, of course, reactivation and acceleration of the economy. Given these favorable expectations, investors will direct their capital to the stock exchanges and promotion in general will experience these contributions.
      4. On the other hand, inflation is an aspect to consider, since its evolution will influence decisions on the need for increases or decreases in interest rates by the monetary authorities.

The other key factor to understand the behavior of markets is the evolution of economic growth or the economic cycle, taking into account also that interest rates, inflation and economic growth are interrelated. On this basis, the securities markets generally have the following behavior:

  • If financial markets expect the economy and businesses will improve in the future, then the stock will rise.
  • If markets expect the economy or corporate earnings worsen the bags will fall.

Stages of fundamental analysis

– The growth of international and national economy
– The consumer price index (CPI) or inflation
– Interest rates and money supply
– The exchange rate
– Internal / External Demand
– Public / Private Investment
– Savings rate
– The public deficit, public debt to GDP
– Balance of payments
– Fiscal policy
– Industrial Price Index
– Labour market (labor costs, labor flexibility)
– Economic policy government
– Unemployment rate
– Importance of the sector at national level
– Comparison or importance in the international arena
– Exposure to foreign competition
– Degree of concentration and cooperation
– Degree of maturity
– Barriers to entry in the sector
– Exit barriers
– Analysis of Porter
– Institutional Analysis (legislation)
– Lifecycle sector
– Sensitivity to economic cycles
– Trends short and medium term
– Margins with those operating in the sector
– Technology
– Market Analysis
– Investment Policy
– Position of the company in the field (competitive forces)
– Products
– Prices
– Quality
– Import
– Export
– Strategies
– Diversification policy
– Technology
– Economic and financial analysis
– Financing policy (actions, extensions, bonds)
– Analysis of the balance sheet and ratios
– Analysis of the income statement and ratios
– Analysis of the State of source and application of funds– VALUATION OF THE COMPANY:
– The dividend discount
– Discounting other cash flows
– The discount free cash flows
– The discount cash flow available to shareholders
– Cash-flow
– The measures of value creation


Data source Expansió

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