Primary Market vs. Secondary Market
Are the stocks we buy and sell every day on a brokerage app the "primary market" or the "secondary market"? Knowing the difference makes IPO news much easier to understand.
The Primary Market — Where Stocks Are First Born
The primary market is the market where a company, to raise capital, sells "newly issued" stocks or bonds directly to investors.
The most representative form is the IPO (initial public offering). When an unlisted company lists on the exchange for the first time and takes subscriptions for public offering shares, that happens in the primary market.
The key point is that "the money goes directly into the company." The subscription payments made by investors flow to the issuing company and are used as business funds.
The primary market is where investors buy newly issued securities directly from the issuing entity. (Source: Ministry of Economy and Finance, Dictionary of Current Economic Terms, "primary market")
The Secondary Market — Where Existing Stocks Change Hands
The secondary market is the market where investors buy and sell already-issued stocks among themselves.
When we buy and sell Samsung Electronics on a brokerage app, that is exactly a secondary-market trade. Domestically, KOSPI (the securities market), KOSDAQ, and KONEX are representative secondary markets.
The money exchanged here goes only to the other investor who sold the stock; it does not newly enter the company Samsung Electronics. The price is set by the supply and demand of buyers and sellers.
Examples of the secondary market: the securities market, KOSDAQ, KONEX. Price is determined by supply and demand. (Source: Ministry of Economy and Finance, Dictionary of Current Economic Terms, "secondary market")
How Are the Two Markets Connected?
The primary market and the secondary market are joined like partners. Only when there is confidence that "you can resell at any time (liquidity)" because the secondary market is active will investors participate in the primary market's public-offering subscriptions with peace of mind.
Conversely, when the secondary market freezes, companies also find it hard to raise funds in the primary market. The capital market works only when both markets are healthy together.
To sum up, in the primary market money flows "company → investor," and in the secondary market stocks change hands "investor ↔ investor."
よくある質問
Q. Is subscribing to a public offering always profitable?
No. In many cases the stock price on the first day of listing is lower than the offering price (issue price). Even public-offering shares bought in the primary market can fall in price in the secondary market, so the idea that "new stock = guaranteed profit" is dangerous. This article explains market structure and does not recommend any specific investment.
Q. When I buy a stock, does the money go into that company?
When you buy an already-listed stock in the secondary market, the money goes not to the company but to the other investor who sold the stock. Funds go directly into the company only in the primary market (new issuance such as an IPO or a rights offering).
📋 結果は過去のデータに基づくものです。過去のリターンは将来のリターンを保証しません。
📋 本サービスは投資アドバイスではなく、投資を理解するための教育目的で提供されています。