The South Korean market opened lower on February 20

bad day for KOSPIwhich opens Monday, February 20 with slight drops in 0.29%until the 2,444.19 dots, after the start of the opening session. Compared to earlier dates, the KOSPI sum two consecutive days in negative values.

If we consider the data of the last seven days, the KOSPI note a decrease of 0.35%so that a year ago it still maintains a decrease in 9.62%. He KOSPI is located 1.6% below its maximum this year (2,484.02 points) and a 10.16% above its floor rate for the current year (2,218.68 points).

What is a stock index and what is it used for?

a stock market index It is an indicator used to show the price movement of a certain set of assets.therefore, you must have data from several companies or sectors of a part of the market.

These indicators are mainly used by stock exchanges in various countries and each of them can be integrated by signatures with specific characteristics like having a similar market capitalization or belonging to the same type of company, similarly, some indices only consider a handful of stocks to determine their value or others that consider hundreds of stocks.

Stock indices serve as indicator of confidence in stock market, business confidence, health of national and global economy and stock investment performance and shares of an entity. Generally, if investors are not confident, stock values ​​will tend to fall.

They are also working to measure the performance of an asset manager and they allow investors to compare profitability and risk; measure the opportunities of a financial asset or create portfolios.

These types of indicators began to be used at the end of the 19th century after the journalist Charles H. Dow. carefully observed how the stock prices of companies tended to rise or fall together, so he created two indices: one containing the 20 largest railway companies (since this was the largest industry in the world). era), as well as 12 shares of other types of companies

Currently, in our economy, there are various indices and they can be grouped by geography, industries, company size or even asset typeFor example, the American Nasdaq index is made up of the 100 largest companies mainly related to technology such as Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), Alphabet (GOOG), Tesla (TSLA ), Nvidia (NVDA), PayPal (PYPL), Comcast (CMCSA), Adobe (ADBE).

How is a stock index measured?

Each stock index has its own way of being measured, but the main factor is the market capitalization of each company that incorporates it. This is obtained by multiplying the daily value of the share on the corresponding stock market by the total number of shares that are on the market.

Companies that are in the bag are obliged to present a balance sheet of its composition. This report must be made public every three or six months, as the case may be.

Reading a stock market index also requires observing its evolution over time. Current indices always appear with a fixed value based on security prices on their start date, but not everyone follows this method. Therefore, this may lead to inaccuracies.

If one index gains 500 points in one day, while another adds only 20, it may appear that the former has outperformed. But, if the first started the day at 30,000 points and the other at 300, we can assume that in percentage terms the gains for the second were greater.

These are the main stock market indices

Between the main stock indices of the American Union is the Dow Jones Industrial Average, better known as the Dow Jones, made up of 30 companies. Also S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, we must mention the Nasdaq 100which includes 100 of the largest non-financial companies.

On the other hand, the most important indices of Europe are the Euro Stoxx 50, which covers the 50 largest companies in the euro area. Him too DAX 30, the main German index containing the most important companies of the Frankfurt Stock Exchange; there FTSE100 the London Stock Exchange; he CAC 40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock exchange.

In Asiathe main stock market indices are the Nikki 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE composite index, is considered the main in China, consisting of the most important companies of the Shanghai Stock Exchange. Also, it is worth mentioning the Hang Seung Index in Hong Kong and the KOSPI in South Korea.

As it concerns Latin Americayou have the IPCwhich contains the 35 Most Powerful Companies on the Mexican Stock Exchange (BMV). At least a third of them belong to tycoon Carlos Slim.

Another is the Bovespa, composed of the 50 most important companies of the Sao Paulo Stock Exchange; he Merval from Argentina; he IPSA From Chile; he MSCI COLCAP Columbia; he IBC of Caracas, made up of 6 companies from Venezuela.

Similarly, there are other types of global stock indices such as the MSCI Latin Americawhich includes the 137 most important companies from Brazil, Chile, Colombia, Mexico and Peru.

Likewise, there is MSCI World, which brings together 1,600 companies from 23 developed countries; he MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100made up of the 100 most powerful multinational corporations on the entire planet.