Day without changes for the PSI 20 which begins on Monday, August 1 with a variation of until the 6,123.23 points, after opening. Analyzing this data with that of previous days, the PSI 20 changes the meaning of the previous data, where it marked 0.72%, showing that it is not capable of establishing a clear trend in recent times.
Regarding the last seven days, the PSI 20 accumulates a rise in 2,01%which is why for a year there has still been an increase in 18,83%. The PSI 20 stands one 3,56% below its maximum this year (6,349.21 points) and a 14,84% above its minimum valuation so far this year (5,331.85 points).
Stock market indices… for what?
a stock index is an indicator that shows how the value of a set of assets changes for which it uses data from different companies or sectors of a fragment of the market.
These indicators are mainly used by the stock exchanges of the countries and each of them can be integrated by firms with specific characteristics such as having a similar market capitalization or belonging to the same type of industry, also, there are some indices that only take into account a handful of shares to determine their value or others that consider hundreds of shares.
Stock market indices serve as indicator of confidence in the stock market, business confidence, the health of the national and global economy and the performance of investments in shares and shares of an entity. If investors lack confidence, share prices tend to fall.
They also work to measure the performance of an asset manager and they allow investors to make a comparison between profitability and risk; measure the opportunities of a financial asset or create portfolios.
This type of indicators began to be used at the end of the 19th century after journalist Charles H. Dow. He looked closely at how company stocks tended to go up or down together in price, so he created two indices: one containing the top 20 railroad companies (since it was the biggest industry at the time), as well as 12 actions of other types of businesses
Today there are various indices and they can be grouped according to their geography, sectors, company size or even the type of assetFor example, the US Nasdaq index is made up of the 100 largest companies largely 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 integrates it. This is obtained by multiplying the value of the day of the title in the corresponding stock market by the total number of shares that are in the market.
Firms listed on the stock exchange are required to present a balance of its composition. Said report must be disclosed every three or six months, as appropriate.
Reading a stock index also implies paying attention to its variations over time. Current indices always start with a fixed value based on security prices on your start date, but not everyone follows this method. Therefore, it can be misleading.
If one index sees an increase of 500 points in one day, while another only adds 20, it might seem like the first one outperformed. But, if the former started the day at 30,000 points and the other at 300, it follows that, in percentage terms, the gains for the latter were more important.
What are the main stock indices?
Between the major US stock indices There is the Dow Jones Industrial Average, better known as Dow Jones, of which 30 companies are part. Similarly, the S&P 500, comprising 500 of the largest companies on the New York Stock Exchange. Finally, it is necessary to mention the Nasdaq 100which links 100 of the largest non-financial firms.
On the other hand, the most important indices of Europa are the Eurostoxx 50, which covers the 50 largest companies in the eurozone. On the other hand, the DAX 30, the main German index that contains the most outstanding companies on the Frankfurt Stock Exchange; the FTSE 100 from the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35 of the Spanish stock market.
In Asia the main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, which can be considered the preponderant of China, made up of the most relevant companies on the Shanghai Stock Exchange. The same role played by Hang Seung Index in Hong Kong and the KOSPI in South Korea.
Talking about the Latin American region you have the IPC which contains at 35 most outstanding firms of the Mexican Stock Exchange (BMV). At least a third of them are part of the estate of tycoon Carlos Slim.
Another is the bovespa, made up of the 50 most important companies on the São Paulo stock exchange; the Merval from Argentina; the IPSA From Chile; the MSCI COLCAP from Colombia; the IBC of Caracas, made up of 6 companies from Venezuela.
Finally, there are other types of global stock indices such as the MSCI Latin America which includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.
Similarly, there is the MSCI World, which includes 1,600 companies from 23 developed countries; the MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100 made up of the 100 most powerful multinational firms on the planet.
Samuel Edwards is the name you must have heard many times while reading reports related to Finance, that’s what he is good at. From Major Investments to Stock Market Updates, he got ’em all. Be ready to blow your mind by the mind-blowing reports of Finance World from Samuel Edwards.