Master the Basics: An Introduction to Stock Markets and Deliverable Equities
Introduction: The Engine of Global Wealth
The stock market is often perceived as unpredictable and fast-moving, but for a disciplined investor, it offers something much more reliable. With a thoughtful, long-term approach, the market becomes a strong platform for preserving wealth and achieving steady financial growth
At its core, the stock market is a marketplace where buyers and sellers trade shares of publicly listed companies. When you participate in this market, you aren’t just moving money around; you are buying a stake in the global economy. For investors in the UAE and the wider region, understanding the mechanics of these markets is the first step toward financial independence.
This guide will demystify the concept of Deliverable Equities, explaining why owning the underlying asset is a cornerstone of a solid investment portfolio.
What Are Deliverable Equities?
When financial professionals speak of “Deliverable Equities” (often referred to as Cash Equities), they are referring to the traditional form of stock investing.
Unlike Contracts for Difference (CFDs) or other derivative products where you merely speculate on the price movement of a stock without owning it, Deliverable Equities involve the actual purchase and transfer of ownership.
When you buy a deliverable equity through a regulated broker like Phillip Capital DIFC:
- True Ownership: You become a shareholder of the company. The shares are electronically delivered to your custody account.
- Asset Security: You hold a tangible financial asset that does not expire. You can hold it for days, years, or decades.
- No Leverage Costs: Typically, you pay the full value of the stock upfront. This means you do not incur overnight financing fees or interest charges associated with leveraged trading, making it ideal for long-term holding.
Why does this matter?
For an investor focused on building a legacy, deliverable equities offer stability. You are not betting against the house; you are partnering with the company.
The "Sizes" of Companies: Understanding Market Capitalization
Before you buy a stock, it is crucial to understand that not all companies carry the same risk profile. In the stock market, the size of a company is measured by “Market Capitalization” (Market Cap). This is calculated by multiplying the current share price by the total number of outstanding shares.
- Large-Cap (The Giants): These are massive, stable companies (like Apple in the US, or Emaar in the UAE). They are generally safer and often pay regular dividends, though their growth might be slower compared to startups.
- Mid-Cap (The Growers): Medium-sized companies that are in a phase of expansion. They offer higher growth potential than giants but come with slightly more volatility.
- Small-Cap (The Risky Bets): Smaller or newer companies. These offer the highest potential for massive returns (sometimes 10x growth) but carry the highest risk of failure.
Pro Tip: A balanced “Deliverable Equity” portfolio often holds a mix of these categories to balance safety with growth potential.
The Three Pillars of Profit in Deliverable Equities
Why do millions of people choose to lock their capital into the stock market? The returns on deliverable equities generally come from three distinct sources:
1. Capital Appreciation
This is the most common goal. If you buy shares of a technology company at $100 and the company innovates, grows its revenue, and expands its market share, the stock price may rise to $150. The $50 difference represents your capital appreciation. It is the reward for identifying value early.
2. Dividend Income
Many established companies distribute a portion of their profits back to shareholders. This is called a dividend. By holding deliverable equities, you are entitled to these payments. For many investors in the UAE, building a portfolio of high-dividend yield stocks is a strategy to generate passive income that rivals real estate rental yields, without the hassle of property management.
3. Voting Rights
Because deliverable equities represent ownership, they often come with voting rights. This allows you to vote on corporate matters, such as board appointments or mergers, giving you a voice in the company’s future.
How the Stock Market Works: Mechanics & Indices
The stock market functions as a vast network of exchanges. A company launches an Initial Public Offering (IPO) to raise capital, selling part of itself to the public. Once listed, these shares float on the secondary market where supply and demand dictate the price.
But how do we know if “the market” is doing well? Investors use Indices to track the health of a specific region or sector. An index is a basket of stocks that represents a market.
- S&P 500: Tracks the 500 largest companies in the USA.
- DFM General Index: Tracks the performance of the Dubai Financial Market.
- Tadawul All Share (TASI): The main index for the Saudi Exchange.
When you buy a specific stock, you are usually trying to pick a company that you believe will perform better than these average indices.
The Mechanics of Execution: Market vs. Limit Orders
Entering the stock market requires precision. When you access the POEMS (AE) platform or speak to our dealing desk, you are interacting with the “Order Book.” Understanding how to navigate this ensures you get the value you expect.
There are two primary ways to enter a position:
- Market Order: Immediate Liquidity A Market Order creates a “Taker” event. You are taking the current liquidity available on the exchange.
- Pros: Guaranteed execution. You will definitely own the stock instantly.
- Cons: In volatile markets, the price you see on the screen might change slightly by the millisecond the trade executes (known as “Slippage”).
- Limit Order: Price Control A Limit Order creates a “Maker” event. You are adding liquidity to the order book at a specific price point.
- Pros: Zero slippage. You never pay more than the price you set.
- Cons: No guarantee of execution. If the market does not reach your limit price, your order will remain unfilled.
Which should you use? Most long-term investors use Limit Orders to ensure they enter positions at a fair valuation, whereas active traders often use Market Orders to catch rapid momentum.
Why Trust and Regulation Matter
In the world of finance, the safety of your funds is paramount. Not all brokers are created equal. When trading deliverable equities, you are entrusting a firm with your assets. This is why regulation is the bedrock of the financial system.
Phillip Capital (DIFC) Private Limited is regulated by the Dubai Financial Services Authority (DFSA).
What does this mean for you?
- Segregated Accounts: Your funds are kept strictly separate from the company’s operational funds.
- Transparency: Strict reporting standards ensure that you always know where your money is.
- Global Reach, Local Presence: We combine the strength of a global financial house with the specific regulatory protection of the DIFC, offering you peace of mind while you trade US, European, or Asian equities.
Risk Management: The Key to Longevity
While the potential for reward in the stock market is high, it is not without risk. Markets fluctuate based on economic data, geopolitical events, and company performance.
To succeed with deliverable equities, you must adopt a disciplined approach:
- Diversification: Never put all your capital in one basket. Spread your investments across different sectors (e.g., Technology, Healthcare, Energy).
- Long-Term Horizon: The stock market can be volatile in the short term. Deliverable equities are best suited for investors willing to ride out these waves to capture long-term growth.
- Research: Utilize the research tools provided by your broker to make informed decisions rather than following trends.
Your Journey Starts Here
Investing in deliverable equities is one of the most proven methods to beat inflation and grow your wealth over time. It transforms you from a consumer into an owner. Whether you are looking to invest in global tech giants via the NYSE or stable banking leaders in the GCC, the stock market offers opportunities for every risk appetite.
At Phillip Capital DIFC, we are committed to providing you with the technology, access, and support needed to navigate these markets with confidence.
Disclaimer:
Trading foreign exchange and/or contracts for difference on margin carries a high level of risk, and may not be suitable for all investors as you could sustain losses in excess of deposits. The products are intended for retail, professional and eligible counterparty clients. Before deciding to trade any products offered by PhillipCapital (DIFC) Private Limited you should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. The content of the Website must not be construed as personal advice. For retail, professional and eligible counterparty clients. Before deciding to trade any products offered by PhillipCapital (DIFC) Private Limited you should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin.
Rolling Spot Contracts and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of our retail client accounts lose money while trading with us. You should consider whether you understand how Rolling Spot Contracts and CFDs work, and whether you can afford to take the high risk of losing your money.
