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Definition

The market made up of share transactions between members of the public, which do not directly involve the company that issued the shares. The primary market is where companies sell their shares to the public to raise capital, and the secondary market is where those shares in turn are traded by the public between themselves. Some companies have very active secondary markets where as much as R1 billion worth of shares or more change hands each trading day. Such shares are known as "free-dealing". Other companies' shares are "tightly held" and their secondary market is very "thinly traded" with only a small number of shares changing hands each day and many days with no trades at all. You can see the number shares changing hands each trading day in the volume histogram at the bottom of the chart on your software. You should never buy a share which, on average, trades less than three times what you want to buy. In other words, if you want to buy R10 000 worth of a share then you need to see at least R30 000 worth of that share changing hands every day. Obviously, although the company itself does not benefit directly from the secondary market in its shares, having a good secondary market means that they will be able to raise capital easily in the primary market by issuing more shares. So companies are always trying to make their shares look as good as possible on the JSE. That is why they print such beautiful financial statements. Their financial statements are at least, to a large extent, a marketing tool for the company's image.

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