Introduction
The following research is vital for developing the finance field since it will provide information for future research. There is a need to evaluate the relationship between the UAE stock market and social networking platforms. The following study aims to help the reader to understand how they may utilize different online media to share and receive information on investment opportunities and options. The reader may use the information below to understand the rise of social networking in business activities and how they influence the day-to-day proceedings of business activities. Additionally, the report will aid readers in understanding how the UAE stock market functions. It provides a better analysis of the market and how it operates, influencing investor behavior.
This chapter comprises the research’s background history, the study’s aims, the methodology used, and the report structure. The background provides general information about the reason for writing the report. It generates the motivation behind creating the research and accounts for the factors contributing to the investigation. On the other hand, the study aims and objectives section provides an analysis of the vision and mission of the research and the main factors that lead to the need for further elaboration of the topic. It is necessary to understand the research goals study provide a sense of direction on the way forward while conducting the entire survey while computing the final dissertation. The methodology section of the introduction finetunes the strategy that the researcher uses to obtain information regarding the research. It provides an introduction and background story regarding the research method used to get information. The final section of the introduction includes information regarding the report structure. It gives direction on what to expect in the report and creates a better understanding of what the word entails before the reader navigates.
Background
The main reason for the research is the interest in understanding the contribution of social networks to the development of the stock market of the United Arabs Emirates (UAE). The study answers some questions regarding the role of social networking in the UAE stock market. Therefore, the fundamental motivation behind the research is the interest in unmasking how human beings use social networking platforms to expound their understanding of the stock market. The researcher uses surveys to collect information regarding the topic. The survey is open to any interested person, provided they meet the qualities of the respondent. Some rates include using social networking sites and participating in the stock market. The researcher then analyzes the data they obtain from the respondents to conclude the topic under research. Therefore, the study critically evaluates the information retrieved from the surveys to make conclusions that will aid in future decision-making regarding using social networking platforms to gain information about the research market.
Study Aims and Objectives
Specific objectives and goals must direct a good research topic. These qualities in the research create a profound base for the study and motivate the researcher to channel their energy towards achieving particular objectives. This research aims to understand and elaborate on social networking platforms’ role in the stock market. Other goals of the study include understanding what social networking is, what the UAE stock market is, and what its main sellable facilities are. The research expounds on some factors that affect the stock market through 1 the social networking platforms such as advertisements. The study is essential since it will contribute to the growth of finance.
Methodology
The research is based on the findings of an online survey that the researcher conducted to determine the impact of social networking on the UAE stock market. The survey aims to indulge maximum respondents in attaining accurate answers for the research. Using a survey strategy guarantees high accuracy since many respondents are involved, and t and the questions in the survey are similar for each. This methodological approach sustains the research process since it utilizes minimum funds but obtains maximum accurate responses. The snowball nonprobability sampling form of surveying is applicable in this process. Though the strategy may have some biases, it is minimal since there are open-ended questionnaires. The research methodology eliminates biases since people receive similar questions and equal opportunities to respond, promoting fairness. The survey may have different outcomes based on how the respondents answer the questions. First, the accuracy of the findings in the report is based on the survey methodology since the section contains sensitive information about the source of information in the account. It is an essential segment since it supports the strength of the information provided. This section creates a foundation for the research by indicating the source of information used. This section elaborates on what the researcher did and how they did it, helping the reader understand the research’s reliability and validity (Lee, 2020). Some of the information this section contains is the type of research that the report includes, how the researcher obtains data and how they analyze it to obtain necessary information. Therefore, having this section in the research findings is critical since it improves its convincing power and generates a better conclusion in the long run.
The methodology helps the researcher to emphasize the information they obtain about the research topic and enhances the understanding of the processes involved in data collection and analysis. This section highlights the use of surveys as a data collection strategy and research methodology. It highlights the benefits obtained from its use as a research method. The team enhances the understating of the implications that arise in the research process while using the strategy, ensuring that the reader avoids the mistakes encountered in the data collection and analysis due to the survey strategy.
Research method
The research method focuses on analyzing the topic and answering the questions. The research method that the research uses is by conducting a survey. The strategy uses a set of questions relayed through social media platforms. The questions test the respondents’ understanding of the UAE stock market. In addition, it tries how social networking platforms help the respondents to run their operations and navigate through the stock market (Ganji & Tavakoli, 2018). The surveying strategy is efficient in this research since it saves on the costs the researcher uses to make findings on the research topic. The strategic process is relevant for the study since it allows the researcher to use different respondents in their judgment.
Surveying as a research strategy is vital since it is reliable. It uses similarly phrased questions to test the respondents, thus providing a consistency that other systems may not offer the uniformity provides accurate results since the respondents receive similar questions and provide answers that directly attack the topic under review. This research method is efficient since it has the generalizability characteristic that allows the researcher to ask questions to a larger sample and gain an economic advantage since they do not require excessive materials. Thus, the method is the most appropriate for this research since it provides an avenue for receiving information from many respondents that meet the skills necessary to answer the questions.
Data Collection Strategies
Data collection processes are essential since they provide information supporting the research questions. The process provides solid offers for the information obtained in the research and improves the topic by eliminating elements of doubt. Surveying is a form of data collection strategy that is applied in research. This strategy is efficient in data collection since it provides clear information (Seixas et al., 2018). It is easy to use the system to compute information on the research topic since it allows the respondents with opportunities to answer similar questions. Therefore, analyzing the data collected in the research is simple and efficient since the respondents deliver data that is equal in nature. The online survey data collection strategy is vital in the study aims to collect data from different people using social networking platforms. The system achieves the goal and research topic’s goal and scope in the survey below.
Practical and Technical Aspects of Conducting the Research
Government policies regulate the research process by determining firms’ activities in conducting their research. The actions within the research process must adhere to all government policies to prevent the creation of misleading information. The government contributes to the study by creating conditions that prevent the destruction of the samples by the researcher by constricting the activities they can conduct. Archers must follow the government’s laws to protect the respondents’ reputations and lives (Majid Gilani and Faccia, 2021). For example, since this research uses online surveys as a data collection strategy, the researcher must strictly adhere to cyber laws that prevent the collection of information collected without their awareness. This prevents infringing on their privacy rights and reduces the number of cybercrimes. Therefore, the researcher must understand the government’s role in protecting them and other parties in the entire process of conducting the research process of the final dissertation.
The research below identifies the role of modern technology in its success. It embraces technology by incorporating social media platforms to run online surveys that obtain valuable data that aid decision-making processes. The use of online sources aids in reducing the costs that may accumulate when conducting the process manually since the researcher has to pay people to deliver the surveys to the respondents physically. Moreover, embracing new technology saves on time and resources required to conduct the study since it helps the researcher to obtain accurate information by ensuring that there are security features that prevent the respondents from answering the survey questions more than once hence ensuring that the results are a pure depiction of the actual situation (Tucki et al., 2019). Another advantage obtained from the use of technology is that there is an easy tabulation of the final information. An effective manner of data computation creates a speedy translation, making it possible for the researcher to understand the actual. Therefore, using technical skills benefits the parties relying on the research since it provides correct information at the perfect time.
Ethical Issues in the Research
The entire research process adheres to guidelines that remain ethical to the corresponding parties. Ethical issues in research create reliability in the information obtained by eliminating biases and lies from unwilling respondents. First, the process must involve voluntary participation, where all the members involved are willing to participate without being forced to by other parties. The respondents must receive a briefing from the researcher about the activities they should expect to participate in when responding. An earlier update regarding the activities involved in the entire process prepares them mentally on how to respond to the questions. The researcher should ensure that they do not pay the respondents since doing so would be bribery, affecting the accuracy of the information they retrieve (Tolchin et al., 2020). Briber affects the results since most respondents get convinced to provide information that may positively affect the researcher’s expectation.
Literature Review
Introduction
The literature review section provides a comparison between the current research and other research conducted by other people. It determines the relationship between the reports and findings, giving alternative reasons for evaluating the information. The literature review categorizes the investigation into what body of knowledge contributes to enhancing its expansion. The research process ensures that the literature review section justifies the reasons behind the motivation to conduct it. It provides a historical background of the research topic based on the current historical and previous methodologies. There are three gaps that the literature review identifies. The contextual, geographical, and conceptual gaps influence the research. The literature review is essential for the study since it elaborates the research topic by drawing attention to other resources supporting the idea in the report. The section provides scientific support for the findings in the entire piece.
Theoretical Review
The research gains support from theories that establish the report by elaborating the relationship between the research findings and other ideas. The views help generalize the findings using existing knowledge (Singh and Miah, 2020). For instance, one of the theories used to understand the stock market is the efficient market theory. This theory states that stock prices rely significantly on known factors. Therefore, it insinuates that people may predict the future costs of stocks using their understanding of the existing market forces. In addition, the theory states that the store values correctly under current circumstances until a future date when the events change, leading to a price shift. The approach supports the research since it provides information that theoretically approves the relations between the topic under review and other substantial views.
Empirical Review
On the other hand, the empirical review focuses on supporting the information in the research using other means that physically evaluate the views. The study contains a tabular presentation of data and graphs to aid decision-making. The empirical review section analyses the data the researcher obtains in the survey by conducting mathematical calculations to interpret the data into usable information (Majuri et al., 2018). The section is vital because it helps the researcher to determine the weight of the matter and provides the numerical and diagrammatic presentation of the data. Empirical review eliminates doubt in the data collection process by clearing the discrepancies the respondents offer in responding to the questions. Every research must contain an empirical study to help in decision-making and interpret the data into final information. The helpful review in this research involves the use of numerical values in the passing of the information.
Justification for the Research
The topic is essential for research since it contains critical elements that may contribute to the development of the stock market. Conducting research is vital since it defines the growth of the business sector. The study expounds on understanding the use of social networking platforms in running transactions in the stock market. Furthermore, the research provides information on how people may advance stock trading using social networking platforms. It elaborates on the knowledge of social networking platforms and creates opportunities for investors. Traders relying on social networking platforms may use this research to understand the technological trends that support their interactions in the market. Thus, the report recommends new techniques to use in the trading processes.
Moreover, this research helps readers to understand the nature of the United Arabs Emirates’ stock market. It expounds on various activities in the stock market and helps them prepare in advance for the techniques they may use to make their trading processes easier. The research is necessary since it provides information to new market participants by summarizing information regarding the use of social networking in previous and current years. The study is thus the most appropriate in the history of understanding the relationship between the stock market and the growing development of social networking sites. The study helps the readers to substantiate various aspects that affect the stock market hence vital for scrutiny by the researcher.
Body of Knowledge for the Research
This research lies in the finance body of knowledge since it involves the management of finances in purchasing and selling stocks. Financial management knowledge applies various theoretical approaches to determine the investment choices for the investors. The field utilizes different research skills to enlarge my understanding of various business fields. Some of the skills that financial management requires include the ability to communicate, analytical skills, and interpersonal skills, among others. This field is essential since it helps people identify new ideas that they may utilize to expound their understanding of the knowledge. A solid and deep understanding of financial knowledge allows individuals and firms to increase their profitability ratios by increasing their economic value. The process increases one’s ability to conduct financial planning by encouraging them to obtain information from social networking platforms and influences investment choices. The financial body of knowledge is a required field that many people are interested to know more details about; hence the research will contribute to developing this field.
The stock market initially relied on technical and fundamental analysis to identify the characteristics and structure of the stocks. The methods were, however, inefficient since they could not predict the market downfall in 1987 and 2008 when the world experienced depression and many people lost possessions. Business people in the stock market gained interest in identifying ways to access information to make wise and prior choices before any event (Chhajer et al., 2022). Investors now use the sites to obtain historical data that helps them to make substantive decisions on investment choices. Limited historical resources explain the use of social networking in financial decisions in the stock market. Social networking platforms are thus a present-day information-passing method. For instance, YouTube became verified on February 2005 hence lacking a solid history that lacks a deep penetration of its contribution to the development of stock markets in the precolonial seasons. However, these communication channels influence the trading significantly since their approval and are thus efficient for study as some of the most influential factors on the stock prices.
Definitions
Social networking: It is a process by which people create personal profiles to interact with other people of the same interests. It enables people to make friends with whom they borrow ideas and share information.
Social media: Social media combines different online communication sites such as Facebook and Twitter, allowing registered accounts to share personal or private information.
Social Networking
Social networking involves the creation of personal or career profiles to allow people to interact and share information. It requires people to utilize modern technological networking sites to present their biography for the general members of the public to declare interest and follow them to receive updates on events that occur. Social networking is vital for the community since people with similar areas of interest in both personal and career lives have the opportunity to interact and share ideas. The process facilitates sharing photographs, videos, and other media that allow blogging to pass the intended message. Social networking allows people to send and receive notifications from different people. It helps people to view the shared media and reply to them for interaction. Social networking eases selecting the profiles to follow and helps people gain confidence with their colleagues (Mehta et al., 2018). In addition, people engage in social contests and giveaways, helping to promote brands by creating awareness. Social networks are necessary since they help brands to market their products and allow people to engage in professional and educational learning about specific issues.
Social networking has improved over the years as more people identify the importance of having public or semipublic profiles that enable them to meet and interact with new people. Modern social networking sites frequently emerge, enabling the continuity in the creation of new friendships and relationships among the users (Mehta et al., 2018). Expanding the range of networking platforms enhances consumer choice since people identify with the most prosperous areas and create profiles based on their intended purpose for the need of the sites. Social networking progresses as millions of people register their accounts for different reasons. Various features enhance the social networking processes; however, the most intriguing part is the availability of power to view other people’s profiles. The process helps people identify other participants with similar areas of interest, facilitating their connectivity and interaction.
Merits and Demerits of Social Networking
Social networking has articulated features that distinguish it from other forms of relationship creation platforms. The sites enable people to incorporate new information and communication on their profiles hence updating their followers on specific issues and topics. Social networking involves using digital media to attract attention and create awareness. People voluntarily register profiles and expound their connectivity with others using social networking accounts (Mehta et al., 2018). Members may turn the profiles to either private or public based on their willingness to expose their information to others hence preserving personal confidence and enhancing the security of individual’s information. Social networking sites give subscribers the freedom to share graphical representations of the National Security Agency, guaranteeing proper information sampling.
Social networking is disadvantageous to people since it interferes with personal and professional privacy, affecting the users’ everyday lifestyles. Enemies may use social networking platforms to spread misinformation regarding particular issues and companies. The continued spread of misinformation degrades the business’s success and provokes potential customers to alienate themselves from the operations the company conducts on these sites hence downscaling its progress (Mehta et al., 2018). Moreover, the anonymity of some profiles allows people to spend extra time being cautious to avoid sharing information with the wrong audience. The cost of developing company profiles can be extremely high since the administrators have to pay for spare time weekly to ensure that their platforms extend engagements with more people. Negative compliments from people may interfere with the company from profiling, causing damage to the brand image. Therefore, firms must be extra cautious while introducing their brands to social networking.
Social Media Platforms
Social media platforms are electronic platforms that allow people to disseminate information to different audiences through their accounts. These platforms allow people to create posts to pass information to a particular target group. People have the power to publish their ideas and can as well republish other people’s messages to draft their own and share them with their followers. Social media is critical in ensuring subscribers attain desirable goals and communicate with others. The diversification of technology gives people access to their social media accounts by using gadgets their exposure, such as computers, laptops, mobile phones, and many more. Social media provides web space for users to create and upload content for others to view. The web address helps people to interact through the platforms by providing a profile that people can review and select one they like. It enables conversations between people by connecting with friends and preserves data for use by other parties in the future (Javed Awan et al., 2021). The communication messages and other media that users share possess a time stamp that assures the actual time they upload the posts. The most common social media platforms are Facebook and Twitter since they have substantial registered members. Social media is an essential section of the communication and technology system because it allows people to create personal and public communication accounts.
Merits and Demerits of Social Media
Social media benefits users by providing accurate time information and facilitating interaction between friends. In addition, it helps spread education on different issues and creates awareness bypassing the intended messages to the appropriate recipient. Social media users access information from other people using social medial; hence businesses may use the sites to attract flow into their main website. In addition, it helps advertise and attract both consumers and employees (Appel et al., 2020). Attracting traffic to the website facilitates a smooth transition in the industry since it applies a wise marketing strategy. The platforms help people create communities where they quickly access information about their areas of interest (Javed Awan et al., 2021. Nevertheless, the media experience contributes to some setbacks that restrict their effective utilization. First, cyberbullying, phishing, and hacking are some main factors that discourage people from accessing the sites. These activities encourage the spread of fake news, thus creating a wrong perception of specific issues. Another demerit is that social media usage reduces face-to-face communication; hence tricky for the people communicating to observe the physical reaction to particular information. Thus, using social media platforms is not excessively efficient for firms.
Differences between Social Networking and Social Media
Social networking is a platform for communication, whereas social media are sites for broadcasting information. Social networking helps people to communicate with other people interested in similar areas. On the other hand, people on social media platforms upload information about themselves without necessarily having the intention of talking with others. Social media and social networking differ significantly regarding goals and objectives (Fu et al., 2019). Whereas social networking aims at creating a rapport with new people, social media differs because one is interested in making more buzz and interacting with the viewers. The differences between social networking and social media create interest in understanding the two terms broadly because they are used interchangeably. Social media is connected to social networking since one requires followers whom they share their information with to enlarge their publicity. The success of a social media page depends on how connected a person is with others with similar interests. Thus, the two are essential for developing an interactive advertisement program for businesses.
The Relationship between Social Networking and UAE Stock Market
The UAE has three main stock markets: Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), and Nasdaq Dubai. The three markets trade millions of dollars in each financial period. Social networking involves using websites and creative applications to find people with similar interests. Social networking significantly influences the UAE stock market by affecting stock prices. Traditional advertising through the platforms creates a substantial market price since people gain interest in purchasing stocks. On the other hand, negative propaganda affects stock prices negatively by discouraging people from buying specific stocks. These platforms provide information about trading sites and analyze the performance of different stores. Such media influence traders to join the market by offering vital information that guides people through stock trading.
Social networking platforms attract investors into the market since they provide current and historical data that aid investment choices. A proper market analysis equips the viewer with knowledge regarding the market. Social networking sites help people t understand the market by spreading relevant information and educating the users (Mehta et al., 2021). A recent trend in the UAE stock market is the introduction of demo accounts that help the reader to understand more about the market structure and its operational strategy. Incorporating demonstration accounts helps people practice stock trading before joining real accounts, preventing unnecessary losses.
Social networking services allow firms to advertise on the platforms about the stock market and help the firm enlarge its customer base. The stock market enjoys an affordable advertisement strategy that attracts a broad audience to experience its services. For example, YouTube allows firms to prepare advertisement videos to market their programs at reasonable costs. Furthermore, the company websites help interested members to conduct audits by going through the websites to receive more information about the company. A company gains loyal customers by providing essential information about its operations through its websites. The UAE stock market providers may evaluate the number of customers that visit their websites hence examining their influence in the market. Therefore, the companies may identify their impact in the market and compare forces with rival companies.
Social networking affects the stock market by influencing stock prices. Comments from the general public may determine how the stocks sell. For instance, a positive social media tweet by Elon Musk affected Tesla’s Stock price by increasing the closing prices (Kim et a., 2021). On the other hand, a negative post affected the closing price negatively, whereas a neutral comment did not impact the prices. The relationship between Elon’s comments on online social networking platforms led to a significant impact in determining the concerns on how they affect the stock market. From the analysis, it is clear that the comments lead to a correlation between the stock prices and other factors. The compliments jeopardize the relationship between other investors and the firm offering the stock trades. A negative comment discourages the farm from engaging with the trader due to the rising mistrust issues and lowering prices. Consequently, a positive social media post encourages traders to demand the stocks. The prices, in turn, reduce to attract new investors on board. Therefore, social networking platforms influence stock demand and prices (Chopra, Lakonishok & Ritter, 1992). Measuring the abnormality in the stock market has been a controversial issue in the financial industry over the year; while people refer to financial formulas and betas to assess performance, portfolios of stocks have been established to minimize the high risk that comes from the unpredictability of the market.
In modern days social networking has been shown that it can be used as a tool for businesses where they can study users’ behaviors; if leaders of big organizations understood this and monitored how social networking is affecting their businesses by sourcing out the data collected on those platforms, then it would be easy to predict how it would affect them, especially in the case of stocks markets as this paper will explain further.
Nonetheless, studies have shown an impact of the increase in social networking on organizations’ profits. The more an entity is aware of this concept and how it is affecting their company either directly or indirectly, the better off they are; organizations that can harness this and manage this knowledge have shown to be more profitable and have lowered their transaction costs (Sophia Van Zyl, 2009). Aalborg University in Denmark has developed business models on social networking to understand this phenomenon. They have highlighted how Facebook, YouTube, and Twitter have millions of users who, over the years, have contributed billions of US dollars by using social networking skills. One example of those platforms’ leading models is represented in advertising.
Table 2: Percentage change in Online Advertising spend by industry
The History of the Stock Markets
The UAE is a union between six states and borders Oman and Saudi Arabia and is a member of the Gulf Cooperation Council. The nation has a robust political system led by the president and the supreme council. The state has a system of laws that guide all activities within its borders and has used them to protect the survival and interaction of the citizens. The state has interacted with other governments in many ways by ensuring that there are solid political bonds that eliminate troubles. Additionally, it has participated in many trade treaties with other countries to sustain services and product supply to its members.
The UAE has indulged in many activities that make it among the largest economies in the Middle East. For instance, the state produces among the world’s largest oil reserves, making interaction simple and efficient by promoting economic prosperity. The country’s extensive oil and gas reserves have contributed to developing its economy to a more prosperous one (Al-Shboul & Alsharari, 2019). However, the UAE economy was suppressed by the COVID-19 pandemic, which denied the state some development due to restrictions of movement (Alsuwaidi et al., 2021). The elimination of public transport to control the virus’s spread sabotaged the tourism sector, hence declining the sales of the most profit-generating items like oil and gas.
Definitions
Stocks: Stocks are tradable ownership rights that investors can transfer from one another by exchanging them for money. In addition, they are preferable to equity since they are shareholders’ possessions in public corporations and exchangeable for cash. There are diverse types of stocks, such as standard, preferred, large, mid-cap, small, domestic, international, and growth stocks. The investors determine the value of the stock based on several factors, such as the type of stock they are and the information available about the specific stock.
Investors: These individuals or corporations conduct additional market research, provide financial support that they find helpful, and guarantee high returns. Investors make investment decisions based on their expectations of the market outcomes and the number of profits they expect to obtain from the schemes. They conduct market research and share information to increase their gains.
Stockbrokers: These people aid in the transactions of stock properties by helping identify the potential stocks for trading. The brokers conduct market research and have the power to trade on the investor’s behalf. Stockbrokers are essential in the market since they help investors to access market data at specific rates.
Investment banks: Investment banks are parts of public corporations obligated to conduct financial transactions on behalf of individuals, enhancing sustainability. These financial institutions facilitate the trade of money from one trader to another. The banks conduct the operations at charges and allow the traders to transfer money to different accounts, enabling trading.
Concepts
The stock market is an avenue where people trade shares for public corporations by purchasing them at lower prices and reselling them at higher prices. It allows investors to review the costs for the stocks and creates the understanding that the equity is a fraction of the company hence transferrable from one person to another in exchange for a specific amount of money. The primary function of the stock market is to provide the company with capital to fund its operations as investors purchase the shares. Corporations rely on the need to obtain money from investors by guaranteeing them an opportunity to earn returns on their investments based on their general performance. On the other hand, the secondary goal is to give the investors the chance to make profits as they buy and sell their equity. There are two ways that the investor gains profit in their operations. First, some shares guarantee dividends on the number of shares one holds. Alternatively, the investor can profit from reselling their stocks at a higher value than the one they purchased, hence income.
Investment trading is traceable to the precolonial times when people traded overseas, and commodities had to move from one region to another by shipping. The transportation process was risky since investors transported them by water travel, risking the loss through sinking. Therefore, the traders needed investors to provide finances to protect the goods, after which they would receive investment returns. Thus, value trading existed since investors provided money to enable transportation and receive profits from their capital. The stock market originated in London, where people met in the streets to trade their property and ownership rights physically (Marcuzzo & Sanfilippo. 2020). The transactions were physical. Thus, both parties needed to be in the market. The facilitators used telephone conversations to link the buyers and sellers and remained on calls for the better part of their day. The traders inflated the market; hence extreme cases of noisemaking were noise hindering efficient markets. However, things changed after the technological innovations that encouraged the firms to trade from home and reduced the flow of physical needs. Thus, investors saved on time and resources they would initially use to sustain their position in the market.
Stock trading later spread to other parts of the Globe, and markets such as the New York Stock Exchange (NYSE) emerged. The NYSE was located in a proper geographical position where firms such as banks, companies, and primary shipping ports operated. The location helped to boost its operations significantly because interested investors accessed its services efficiently. In addition, the company provided listing requirements that attracted investors and introduced minute fees to encourage people to engage in the trade and provide them with the necessary information. Investors joined the market and contributed significantly to its development to become a key player in the business. Most of the stocks are traded online, but a vast amount is sold over the counter, meaning that the parties have to be present to witness and sign the agreement. It is easier for investors to obtain information regarding over-the-counter stocks than those seeking information about those traded via exchanges.
Theories
The valuation of stocks in the market is an issue that frequently raises concerns as more people search for knowledge to calculate and interpret different meanings of the information available. The efficient market hypothesis is one of the critical theories that elaborate more on the stock valuation since it states that the price of the commodities varies based on the information present. Therefore, investors may quickly determine the stock prices by interpreting all the information present in the market. Investors in the stock market must update their information more frequently to ensure that they predict price fluctuations by understanding market conditions. Since the future is uncertain, the efficient market hypothesis helps predict prices using current market conditions. Therefore, business people enjoy a massive benefit from understanding the flow of information that affects the factors affecting the stock value, such as politics.
Another critical theory applicable in the field of stock trading is the more excellent fool theory which purports that one can make profits by selling already overvalued stock to another investor willing to pay a higher price (Liu& Conlon 2018). The investor purchasing the store is the greater fool than the one selling them. This theory suggests that the seller is a risk taker and avoids considering all the information existing in the market. Ignoring the available information is riskier for the trader since they may bear losses they must have avoided as they traded. The theory motivates people to seek information to empower themselves and obtain good investment choices. Investors may use social media and social networking to get information and determine stock prices. The more excellent fool theory helps people identify customers for their stocks and aid in trading.
UAE Stock Markets
In earlier days, investing in the stock market was difficult since people relied on daily news to predict market trends. People used two main strategies to understand the market structure and nature. Fundamental approach and technical strategy are the two familiar technique standard traders used previously to predict the market. The physical approach is where traders research one market structure by educating themselves about the firms in the market (Nti et al., 2020). On the other hand, the technical approach focuses on the market trends like the changes in the prices and volumes of sales (Nti et al., 2020). Therefore, the demand for more appropriate techniques to avail all the information on common platforms arose and led to the formation of social networking platforms like social media, where investors may obtain all the information on a common forum. Social networking is where investors in different regions provide information to people using websites. The process is necessary since it makes the market analysis simple and efficient.
The world is evolving, especially in technology, where new inventions arise daily. Technology development has expanded the human understanding of communication channels that help people in different sections of the globe to interact. The technological innovation of communication sites through online media where people can interact and share information is what we refer to as social networking (Jackman 2019). Developers create sites for use in sharing audio, photographic, or video graphics images that pass messages through various communication tools like computers and mobile smartphones (Verduyn et al., 2020). People use social networking sites to share information about online and real-world activities with others in different geographic proximity. Early social networking platforms grew with their interest in encouraging people to develop their profiles by sharing personal information and ideas with other respondents by communicating through chats and messages.
Some of the recent social networking sites in the modern world include YouTube, Twitter, Facebook, LinkedIn, and Instagram, among others. These sites help people share information in various ways, such as videos, images, and posts. According to the 2022 statistics on the use of social networks in the United Arabs Emirates, 99% of the population are internet users and possess accounts on either of the platforms above (Almuraqab, 2020). They use the media to keep in touch with family members and friends, research studies and areas of interest, and apply for career opportunities and online learning, among other activities. The use of social networking in the UAE has a positive trajectory, with most of the occupants in these areas signing up for the sites. Social networking helps people achieve personal connections, helps update individual users with current news, aids in the advertisement, and creates educational content. Social networking in UAE is much developed to allow people to relate with one another at very influential points.
Table a: A presentation of the internet connectivity in UAE based on demography
Methodologies to Analyze the Markets
The use of surveys and online research journals are the key strategies the research utilizes to obtain information regarding the stock markets. The surveys help identify common knowledge across the stock market and create awareness that the study contributes to a better understanding of the stock market. Online research helps identify market operations and avails sensitive and rare information about social networking and social media. The research strategies applied are easy to conduct and affordable for the researcher since the surveys are posted on online social media platforms where willing respondents share their experience in the stock market. Moreover, the survey is accessible to many people, eliminating errors by increasing the accuracy of the data relayed. The methods used to analyze the market are technical and fundamental analyses. Fundamental analyses rely on historical data, whereas technical analysis uses past market data, primarily price and volume, to determine the investor’s behavior.
Incidences that Occurred in the New York Stock Market
The New York Stock Market has undergone a series of unexpected crashes that sabotaged its operations and lowered stock prices. A recent event is the emergence of the COVID-19 pandemic, which affected many production sectors. Another example of a market effect in the 2010s is the drop in the value of GameStop Corp Stock, a video games supplying company, due to technological changes that led to a shift in the operations to online sales. GameStop headquarters have been in Dallas, Texas, since its foundation in 1984 (Lucangeli 2021). The company’s stock price significantly dropped since the spread of smartphones declined the demand for video games.
Summary
The literature review section of the report analyzes the relationship between the research and other materials that influence its progress. The section elaborates on the theoretical and empirical reviews parts of the study. Academic research focuses on different theories that support the topic; in contrast, the empirical review focuses on the practical section of the research and elaborates on it using mathematical and diagrammatic data representations. The area justifies the reasons for the study. It reviews the body of knowledge that the topic contributes to and provides information about the research methodologies that it uses and that have previously been used by other researchers to conduct similar research. Finally, the section finds more evidence on the notable gaps in different authors’ works on the research topic. The identifiable gaps in the assignments are mainly in contextual, geographical, and conceptual forms, and identifying them helps create more information regarding the report’s framing. This section is vital for the research since it provides a sense of direction and creates interest in reading it since there is a clear distinction from other works by using unique framing and content approach.
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Appendices
Apendix 1
Appendix 1: Percentage change in Online Advertising spend by industry
