Capital market trading
Invest in securities traded on the Prague Stock Exchange and other global stock exchanges
to foreign exchanges via dealing KB
- You pay no fee for submitting an order to buy or sell shares online and for managing your portfolio
- You will receive a monthly or quarterly statement from your portfolio account
- We will automatically credit the paid dividends to your portfolio account
- You pay the bank a fee for managing the securities in your portfolio
- Possibility to purchase and sell shares, bonds, and other instruments on international markets (including the Prague Stock Exchange)
- Shares are securities that are associated with shareholders’ rights to take part in the company management, profits, and liquidation balance (company dissolution)
- Bonds are securities that are associated with their holders’ right to request repayment of outstanding amount (nominal amount) and regular payment of returns accrued as of specific dates
- Bonds include government and municipal bonds, with fixed, variable or zero interest rate (zero-coupon)
- Each month, you will receive your portfolio account statement, with detailed description of financial funds/securities balances – this statement also provides an overview of all financial transactions taking place within sub-accounts
- You can specify a price limit, at which requested transactions are to be executed
- No fees charged by KB for submitted share purchase/sale orders and/or portfolio management
- Fee charged for the administration of securities in your portfolio
- Administration services also include automatic payment of dividends to your portfolio account and other capital transactions free of charge
- Dividends paid out in foreign currencies are credited to your portfolio account in foreign currency as well
There are many risks associated with capital market trading that may impair investments.
Risks associated with shares:
Company (issuer) risk
Each buyer becomes a company shareholder, thereby taking part in its development and any profit or loss. All risks are usually reflected in the current market value – the returns on such investments are thus difficult to predict. In extreme cases, the given company may even go bankrupt and the entire investment may be lost.
Prices of shares may be subject to unpredictable fluctuations, resulting in potential losses. Prices go up and down in the course of medium-term and long-term cycles, without any way of determining the duration of such cycles. This is general market risk, associated with market sentiments, global political situation and situation prevailing in the financial markets. This risk must be distinguished from risks specific to a company.
Dividend payment risk
Dividend per share mainly depends on revenue of the issuing company as well as its dividend policy and development plan. In case of low profits, dividend revenue may be reduced or not paid out at all.
Investments in shares denominated in foreign currencies are also associated with currency risk. Investments may not be profitable in CZK equivalent, in spite of increasing market prices of share.
Risks associated with bonds:
Interest rate risk
Interest rates and bond prices carry an inverse relationship. As interest rates fall, the price of bonds generally rises and, conversely, when interest rates rise, bond prices tend to fall. Uncertainty relating to interest rate changes means that investments in fixed-rate securities are associated with the risk of declining prices of such securities, when interest rates rise. The longer the maturity and the lower the interest rate, the higher the bond sensitivity to rising market rates.
Investors buying bonds essentially commit to receiving a rate of return, either fixed or variable, for the duration of the bond or at least as long as it is held. In case inflation increases dramatically, and at a faster rate than investment income, investors may actually achieve a negative rate of return.
Investors must consider the possibility of bond issuer’s temporary or permanent default, not being able to repay the coupon or principal in time. In their investment decisions, clients must factor in the possibility that corporate and municipal bonds are not guaranteed and that they may lose their initial investments, either in part or in full.
Rating downgrade risk
Issuers’ ratings are published by ratings institutions. They assess company’s ability to manage and repay its debt. If a company's credit rating is low or its ability to repay is questioned, banks and lending institutions may charge the company a higher interest rate for future loans. This further impairs the company's ability to satisfy its debts, prices of existing bonds decline, and existing bondholders incur losses when selling their bonds.
Government bonds usually do not have any problems with market liquidity. However, the situation may be quite different for other types of bonds. Bonds traded on a thin market may be sold at lower prices than those expected by investors on the basis of standard reports.
In its prospectus, an issuer may reserve the right to bond prepayment (call option), usually exercised in case of declining market interest rates. Therefore, investors may not generate expected returns to maturity.
Investments in bonds denominated in foreign currencies are also associated with currency risk. Investments may not be profitable in CZK equivalent, even if an investor holds the given instrument to maturity.
This product is intended for individuals and legal entities, who wish to trade on capital markets with amounts of no less than CZK 500,000.