Rising session for the KOSPIwhich ended the session on Wednesday, May 18, with slight increases in 0,21%until the 2,625.98 points. The KOSPI reached a maximum volume of 2,644.13 points and the minimum number of 2,618 points. The trading range for KOSPI between its highest point and its lowest point (maximum-minimum) during this day stood at 0,99%.

In the last week, the KOSPI accumulated a rise of 1,3%; on the other hand, for a year now it has accumulated a decrease in 18,18%. The KOSPI stands one 12,15% below its maximum this year (2,989.24 points) and a 2,98% above its minimum price for the current year (2,550.08 points).

What is a stock index and what is it for?

a stock index is an indicator that measures the evolution of the value of a set of assetsso it takes data from various 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 different specificities such as having a similar market capitalization or belonging to the same type of industry, 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 shares of an entity. Generally, 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 analyzed 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 in humanity there are various indices and they can be associated based on their geography, sectors, company size or even the 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 to read an index?

Each stock index has its own calculation method, but the main factor is the market capitalization of each firm that integrates it. This is obtained by multiplying the value of the day of the security in the corresponding stock market by the total number of shares that are in circulation in the market.

Listed companies are required to present a balance of its composition. This report must be published every three or six months, as the case may be.

Reading a stock index also involves paying attention to its changes over time. New indices always start 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 a 500-point increase in one day, while another only gains 20, it might appear that the first index outperformed. But, if the first one started the day at 30,000 points and the other one at 300, it can be deduced that, in percentage terms, the gains for the second one were more remarkable.

What are the main stock indices?

Between the major US stock indices There is the Dow Jones Industrial Average, better known as Dow Jonesmade up of 30 companies., the S&P 500, comprising 500 of the largest companies on the New York Stock Exchange. Finally comes the Nasdaq 100which brings together 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 Asiawe have the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, is seen as the most notable 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 Americayou have the IPCwhich 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 Americawhich 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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