The meaning of capital market

Capital market is the sum of all medium and long-term capital trading activities (more than one year), including stock market, bond market, fund market and medium and long-term credit market. Its financing funds are mainly used as capital for expanding reproduction, so it is called capital market. Capital market is a mechanism to guide resource allocation through income expectation.

Composition of capital market

Capital market should at least cover: securities market (stock market, long-term bond market-long-term national debt, corporate bonds, financial bonds, etc. ), long-term credit market (long-term mortgage loans, long-term project financing, etc. ) and derivatives market (financial futures market, financial options market, etc. ).

The securities market is the place where securities are issued and traded. In a broad sense, the securities market refers to the sum of all trading relationships with securities as the object. From the perspective of economics, the securities market can be defined as a trading mechanism that determines the price of securities according to the relationship between supply and demand through free competition. The securities market is the product of the development of market economy to a certain stage, and it is a market to solve the contradiction between capital supply and demand and liquidity. The securities market realizes the connection between financing and investment by issuing and trading securities, which effectively solves the contradiction between supply and demand of funds and the adjustment of capital structure. In the developed market economy, the securities market is an important part of a complete market system, which not only reflects and regulates the movement of monetary funds, but also has an important impact on the operation of the whole economy.