Bearish session for the KOSPI which closed the session on Tuesday, June 7, with large falls in 1,66%until the 2,626.34 points. The KOSPI marked the highest number of 2,662.04 points and a minimum of 2,622.78 points. The trading range for KOSPI between its highest point and its lowest point (maximum-minimum) during this day stood at 1,47%.

Compared to the last week, the KOSPI accumulates a drop in 0,44%so that in year-on-year terms it still accumulates a decrease in 17,64%. The KOSPI stands one 12,14% below its maximum this year (2,989.24 points) and a 2,99% above its minimum valuation so far this year (2,550.08 points).

What is a stock index and what is it for?

a stock index is an indicator that shows how the price of a set of assets changesfor which it uses data from various companies or sectors of a fragment of the market.

These indicators are mainly used by the stock exchanges of various countries and each of them can be integrated by firms with different specificities such as having a similar stock market capitalization or belonging to the same type of business, in addition, 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 company shares. If investors lack confidence, share prices tend to fall.

They also work to measure the performance of an asset manager and allow investors to have comparisons between return 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. carefully researched how company stocks tended to go up or down in price together, so he created two indices: one containing the top 20 railroad companies (it was the biggest industry at the time), as well as 12 actions of other types of businesses

Currently in our economy there are various indices and they can be grouped according to their location, sectors, company size or type of assetFor example, the US Nasdaq index is made up of the 100 largest companies mostly 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 it calculated and how to read them?

Each stock index has its own way of calculating, but the main component is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the share 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 come to light every three or six months, as the case may be.

Reading a stock index also involves observing its changes over time. New indices always appear with a fixed value based on the prices of the securities 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 a day, while another only adds 20, it might appear that the first one outperformed. However, if the former started the day at 30,000 points and the other at 300, it can be derived that, in percentage terms, the gains for the latter were higher.

What are the main stock indices?

Between the main stock indices in the American Union There is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Also, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Lastly, appears the Nasdaq 100which unites 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 containing the strongest 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 35of the Spanish stock market.

In the asian continent we have the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which is listed as the strongest in China, made up of the most prominent 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 Latin America, you have the IPC which contains at 35 most powerful firms of the Mexican Stock Exchange (BMV). At least a third of them are owned by magnate 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.

Also, 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 100made up of the 100 most powerful multinational firms on the planet.

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