Financial Glossary
56 essential financial terms explained with Asian market context and real-world examples.
Valuation
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Measures how expensive a stock is relative to profits.
Real Dividend Yield
Dividend yield after stripping out local inflation. Tells you whether a stock's payout actually preserves purchasing power.
NAV Premium / Discount (REIT)
How much above or below net asset value a REIT's units trade. Negative = discount = market pricing in trouble (or stale NAV).
Fundamentals
Market Capitalization (Market Cap)
Total value of a company's shares. Calculated as stock price multiplied by total shares outstanding.
EPS (Earnings Per Share)
Company's net profit divided by outstanding shares. Shows how much profit is allocated to each share.
Distribution Safety Score (REIT)
0-100 score measuring how safe a REIT's distribution is. Four 25-point components: payout ratio, coverage, occupancy, leverage.
REIT Aristocrat
An Asian REIT that has paid distributions every year for 10+ years and not cut the annual payout in the last 5.
Market Concepts
Bull Market
A market condition where prices are rising or expected to rise, typically defined as a 20%+ increase from recent lows.
Bear Market
A market condition where prices fall 20% or more from recent highs, characterized by widespread pessimism.
FII / FPI (Foreign Institutional Investor)
Foreign funds and institutions investing in a country's stock market. Their flows significantly impact Asian markets.
Circuit Breaker
Automatic trading halt triggered when a market index falls by a certain percentage. Designed to prevent panic selling.
Chaebol
Large South Korean family-controlled conglomerates like Samsung, Hyundai, LG, and SK Group.
Keiretsu
Japanese business groups with interlocking ownership and business relationships. Examples: Mitsubishi, Mitsui, Sumitomo.
Stock Connect (Shanghai-Hong Kong / Shenzhen-Hong Kong)
Cross-border trading links allowing international investors to trade Chinese A-shares through Hong Kong.
Market Breadth
Measures how many stocks are participating in a market move. Broad participation is healthier than narrow leadership.
Income Investing
Macroeconomics
GDP (Gross Domestic Product)
Total value of goods and services produced by a country. The primary measure of economic size and growth.
Inflation
Rate at which prices increase over time, eroding purchasing power. Measured by CPI (Consumer Price Index).
Interest Rate (Central Bank Rate)
The rate at which a central bank lends to commercial banks. The most powerful tool for controlling economic growth and inflation.
Trade Balance
Difference between a country's exports and imports. A surplus means more exports; a deficit means more imports.
Forex & Currencies
Exchange Rate
Price of one currency expressed in terms of another. Determines the value of international trade and investments.
Forex Trading (Foreign Exchange)
Buying and selling currencies for profit. The forex market is the world's largest financial market by volume.
Carry Trade
Borrowing in a low-interest-rate currency and investing in higher-yielding assets. Japan's low rates make the yen a popular funding currency.
Currency Peg
A fixed exchange rate policy where a country ties its currency to another currency, typically the US Dollar.
Investing
Index Fund / ETF
A fund that tracks a market index like the Nikkei 225 or SENSEX, providing diversified exposure at low cost.
Blue-Chip Stock
Shares of large, well-established, financially stable companies with a history of reliable performance.
REIT (Real Estate Investment Trust)
A company that owns income-producing real estate and distributes most profits as dividends.
Fundamental Analysis
Evaluating a stock by examining the company's financial statements, management, competitive position, and economic conditions.
Corporate Governance
The system of rules and practices by which a company is directed and controlled. Critical for investor protection in Asia.
Mutual Fund
A pooled investment vehicle managed by professionals, investing in stocks, bonds, or other assets on behalf of investors.
ESG Investing
Investing based on Environmental, Social, and Governance criteria alongside financial returns.
Sovereign Wealth Fund (SWF)
Government-owned investment fund. Asian SWFs like GIC, Temasek, and CIC are among the world's largest.
ADR (American Depositary Receipt)
Certificates representing shares of non-US companies traded on US stock exchanges. Many Asian companies have ADRs.
Market Basics
Stock Exchange
An organized marketplace where stocks and securities are bought and sold. Each Asian country has at least one major exchange.
IPO (Initial Public Offering)
When a private company first sells shares to the public on a stock exchange.
Demat Account
An electronic account that holds shares in digital form. Required for stock trading in India.
Risk
Policy & Central Banks
Market Indices
SENSEX (BSE Sensitive Index)
India's oldest stock market index, tracking 30 major companies listed on the Bombay Stock Exchange.
Nikkei 225
Japan's premier stock market index, tracking 225 major companies listed on the Tokyo Stock Exchange.
Hang Seng Index
Hong Kong's primary stock market index, tracking the largest companies listed on HKEX.
KOSPI (Korea Composite Stock Price Index)
South Korea's main stock market index, tracking all companies on the Korea Exchange.
SSE Composite Index
China's main stock market index, tracking all stocks listed on the Shanghai Stock Exchange.
Trading
Short Selling
Selling borrowed shares, hoping to buy them back cheaper. Profits from falling prices.
Market Order vs Limit Order
Market order executes immediately at current price. Limit order executes only at your specified price or better.
Technical Analysis
Analyzing stock price charts and patterns to predict future movements. Based on the idea that price history repeats.
Moving Average (MA)
Average stock price over a set period. The 50-day and 200-day moving averages are the most watched technical indicators.
Candlestick Chart
A type of price chart showing open, high, low, and close prices. Originated in 18th century Japan for rice trading.
Risk-Reward Ratio
Compares potential profit to potential loss on a trade. A 1:3 ratio means risking $1 to potentially make $3.
Margin Trading
Borrowing money from a broker to buy stocks, amplifying both gains and losses.