Brazil’s Bovespa index registers a drop of 0.38% on February 13

Negative start to the day for the Bovespawhich begins on Monday, February 13 with slight decreases in the 0.38%until the 107,664.92 dots, after the start of the opening session. If we compare the data with past dates, the Bovespa The direction of the previous data changes, where a rise of 1.77% was recorded, showing a lack of continuity in the result lately.

Looking at last week’s data, the Bovespa marks a decrease of 0.97%so that year-on-year there is still a decrease in the 5.03%. He Bovespa is located 5.78% below its maximum this year (114,270.07 points) and a 3.36% above its minimum price for the current year (104,166 points).

Stock market indices… What for?

a stock market index is an indicator that shows how the price of a set of assets is changingit therefore collects data from different companies or sectors of a market fragment.

These indicators are mainly used by the stock markets of various countries and each of them can be integrated by firms with specific characteristics like having a similar market capitalization or being in the same type of industry, 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. If investors are not confident, stock prices tend to fall.

They are also working to measure the performance of an asset manager and they allow investors to have comparisons between 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. To see carefully how company stocks tended to rise or fall together in price, he therefore created two indexes: one that contained the 20 largest railroad companies (since that was the largest industry in era), as well as 12 shares of other types of companies

Today there are various indices and They can group together based on geography, industries, company size, or even asset classFor example, the U.S. Nasdaq index is made up of the 100 largest companies with broad technology connections 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 way of being measured, but the main factor is the market capitalization of each company that incorporates it. This is obtained by multiplying the value of the share on the corresponding stock market by the total number of shares that are in the hands of the investors.

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

Reading a stock market index also requires examining its evolution over time. Current indices always start with a fixed value based on stock prices on their start date, but not everyone follows this method. Therefore, it can be misleading.

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

What are the main stock market indices?

Between the major US stock indices is the Dow Jones Industrial Average, better known as the Dow Jones, made up of 30 companies. Likewise, the S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally comes 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 the asian continentwe have the Nikki 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE composite index, which appears as the main in China, composed of the most relevant 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 the capital of 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.

Finally, 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.