Different Types of Stocks

There are two main types of stocks: common stock and preferred stock.

Common Stock

Common stock is, well, common. When people talk about stocks they are usually referring to this type. In fact, the majority of stock is issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.

Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid. Read more

European shares rise for 3rd day; financials gain

European shares advanced for a third straight session on Wednesday, led higher by financial stocks, with sentiment improving on signs that the European Union may rescue heavily indebted Greece.

At 0812 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.8 percent at 988.54 points after gaining 0.2 percent in the previous session. The index, which fell nearly 4 percent last week, is up 53 percent from a record low in March 2009.

Banks were among the top gainers, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Lloyds (LLOY.L), Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA) rising 1.2 to 2.3 percent.

“May be the market has exhausted its neurosis near term. You can’t have a sell-off every day on the basis of Greece. The market is consolidating, but is still in a cyclical bull phase,” said Bernard McAlinden, investment strategist at NCB Stockbrokers, in Dublin.

“It’s highly unlikely that there will be any decisive bailout in the form of debt guarantees for Greece or any of the other peripheral economies. The onus is still very much on the Greeks to make necessary adjustments,” he added.

European governments have agreed in principle to help Greece, a senior German coalition source said on Tuesday, in what would be the first rescue of a euro zone member in the currency’s 11-year history.

The comments were the strongest signal so far that European Union economic heavyweight Germany may be ready to step in to stave off a crisis of confidence in the 16-nation currency bloc that has roiled markets around the globe.

ArcelorMittal (ISPA.AS), the world’s top steelmaker, fell 5.3 percent. It forecast higher shipments but lower prices in the first three months of 2010 and a core profit that could fall from a fourth-quarter figure that just missed expectations.

Soros Is ‘Confident’ Greece Will Stay in Euro Region

Billionaire investor George Soros, who made $1 billion in 1992 correctly betting against the British pound, said he expects Greece will be able to remain in the euro region.

“I’m actually confident Greece will do whatever is necessary to meet conditions to remain a member of the euro to qualify for financing by the ECB for Greek government bonds,” Soros told reporters in Jakarta today. The European Central Bank has limits for the ratings of bonds it accepts as collateral.

World stock markets rallied since yesterday as prospects for a bailout of Greece eased concern that deteriorating government finances will derail the global economic recovery. The European Union is scheduled to hold a summit in Brussels tomorrow as the Greek government braces for a wave of strikes protesting plans to reduce the region’s largest budget deficit.

German Finance Minister Wolfgang Schaeuble will brief lawmakers today on steps he may take to support the Greek government as European leaders dropped their resistance to rescuing the nation in an effort to protect the rest of the euro region from market turmoil.

“Providing Greece meets its target, I hope the European Union, the European Central Bank, the euro zone will find a way to finance the government in a way that’s not too expensive for Greece to provide some relief,” said Soros, 79, who was in Indonesia meeting Vice President Boediono.

‘Strict Conditions’

Any support would come “under strict conditions and if the Greek government undertakes far-reaching state reforms,” Michael Meister, financial-affairs spokesman for German Chancellor Angela Merkel’s Christian Democratic Union, said in an interview yesterday. Options include bilateral aid or a package put together by a group of countries using the euro, Meister said.

Greek Prime Minister George Papandreou’s government yesterday floated new steps to reduce the deficit, including cuts of as much as 5.5 percent in government workers’ wages and a waiver on taxes for Greeks who repatriate funds held abroad.

Fitch Ratings analyst Brian Coulton said yesterday that any country leaving the euro area would likely face a “banking crisis.”

Credit Default Swaps

The cost to protect investors from default on Greek government bonds fell a record 50 basis points today, CMA DataVision prices show. Credit default swaps for Portugal and Spain also declined.

The MSCI World Index of developed-market stocks climbed 0.1 percent at 2:53 p.m. in Tokyo, a second straight gain, paring the year’s losses to 5.7 percent. The index has slumped for four straight weeks on concern that deficits and sovereign debt in Europe will slow the global recovery.

“I think the markets are generally concerned on sovereign debt and Greece is at the forefront of that issue,” Soros said.

Soros gained fame in 1992 when he reportedly made $1 billion betting that Britain would fail to keep its currency in a European exchange-rate system that pre-dated the euro. He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year.

Barclays Japan Investment Banking Head Said to Leave

Barclay Plc’s co-head of investment banking in Japan, Hideaki Sunaga, is leaving after about a year with the firm, two people with knowledge of the matter said.

It isn’t clear exactly when Sunaga, a former head of European investment banking at Nomura Holdings Inc., will leave Barclays, said one of the people, who declined to be identified as no public announcement has been made.

Barclays, which bought Lehman Brothers Holdings Inc.’s U.S. operations in 2008, hired Sunaga in January last year as part of a push to expand in Japan, where Citigroup Inc. and UBS AG were shedding jobs. Sunaga said in a March 2009 interview that Barclays aimed to double its local investment-banking workforce to 80 people over two years.

“Japan is a treasure-trove,” Sunaga, 48, said at the time. “The incentive for Japanese companies to buy foreign assets is getting stronger as the prolonged financial turmoil pushes asset prices lower.”

Mariko Hayashibara, a Tokyo-based spokeswoman at Barclays, declined to comment. Sunaga didn’t pick up calls to his office phone seeking comment.

Sunaga joined Barclays as a managing director in charge of corporate finance and merger advisory in Japan, according to a Jan. 9, 2009, company statement. He shares the title of co-head of local investment banking with Takemi Ando and reports to Hong Kong-based Matthew Ginsburg, a former Morgan Stanley banker who joined Barclays in September as head of investment banking for Asia Pacific.

Sumitomo Mitsui Sale

Barclays is the third-biggest underwriter of Japanese equity and equity-linked transactions this year, according to data compiled by Bloomberg. It helped Sumitomo Mitsui Financial Group Inc. raise about 970 billion yen ($10.8 billion) selling common stock in January.

During the more than two decades he worked at Nomura, Sunaga advised Matsushita Electric Industrial Co. on its takeover of a building materials and electrical appliances affiliate in 2004 and helped the firm underwrite a global equity offering for East Japan Railway Co. in 2002.

Barclays has hired about 100 people in Japan since October 2008, mainly former Lehman employees, building its equity and research sales team there even as UBS, HSBC Holdings Plc and Citigroup retrenched in the world’s second-largest economy.