The South Korean index ended the day higher on May 31

The South Korean index ended the day higher on May 31

Turnaround day for KOSPI which ended on Tuesday, May 31, with increases of 0,6%until the 2,685.63 points. The KOSPI reached a maximum of 2,685.63 points and the minimum number of 2,654.32 points. The trading range for KOSPI between its highest point and its lowest point (maximum-minimum) during this day stood at 1,17%.

Taking into account the last seven days, the KOSPI accumulates a rise in 3,06%; although for a year it still maintains a drop in 15,32%. The KOSPI stands one 10,16% below its maximum so far this year (2,989.24 points) and a 5,32% above its minimum valuation for the current year (2,550.08 points).

Stock market indices… for what?

a stock index It is an indicator that shows how the value of a given set of assets changesfor 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 each country 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 consider 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, stock values ​​tend to fall.

They also work to measure the performance of an asset manager and allow analysis of comparisons 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 it calculated and how to read them?

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

Companies 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 the case may be.

Reading a stock index also implies observing its evolution over time. New indices always start with a fixed value based on stock prices on your start date, but not everyone follows this method. Therefore, it can be misleading.

If one index rises 500 points in one day, while another only adds 20, it might appear that the former outperformed. However, if the former started the day at 30,000 points and the other at 300, it can be assumed that, in percentage terms, the gains for the latter were larger.

Major stock indices

Between the major US stock indices There is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Also, the S&P 500, comprising 500 of the largest companies on the New York Stock Exchange. Lastly, appears the Nasdaq 100which brings together 100 of the largest non-financial firms.

On the other hand, the most outstanding indices of Europa are the Eurostoxx 50, which covers the 50 largest companies in the eurozone. He too DAX 30, the main German index that contains the most prominent 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 continentthe main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which can be considered the main one in China, made up of the most important 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.

Similarly, there are other types of global stock market 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.

Samuel Edwards
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