Understanding how equities increase or decrease in value How supply and demand affect equities If a lot of investors would like to buy shares in a company, but not many existing shareholders want to sell, this is likely to push the share price up. The opposite is also true – if more people want to sell shares than want to buy them, the price is likely to go down. How a company’s performance affects equities A company will issue statements about its expected earnings and profitability in the coming months and years, and investors use this information to decide whether or not to buy or sell shares. This affects supply and demand, which ultimately determines the share price. How market trends and outside factors can affect equities If reports from research analysts predict a company is likely to do well, this may Supply and demand have a big increase demand for its shares and push up the share price. On the other hand, influence on the value of an equity if the reports say a company will likely perform less well in the future, the share price may fall. If more people want to buy shares in a company, the price is likely to rise – if Outside factors, such as how a competitor company is performing or acquisitions more people want to sell, the price is and mergers, can also influence share prices either positively or negatively. likely to fall Speculation about a company’s stability and future growth can also affect the share price 5