Brazil’s Bovespa index registers a loss of 0.37% on February 16

Bearish day for the Bovespawhich begins the session on Thursday, February 16 with slight declines in the 0.37%until the 109,191.37 dots, after the start of the opening session. Compared to previous days, the Bovespa reverses the value of the previous day, where it ended with an increase of 0.91%, showing that it is not able to set a definite trend lately.

Considering last week, the Bovespa mark a rise 1.1%; On the other hand, year-on-year, it still accumulates a decrease of 4.91%. He Bovespa is located at 4.44% below its maximum this year (114,270.07 points) and a 4.82% above its minimum price since the beginning of the year (104,166 points).

What is a stock index and what is it used for?

a stock market index is an indicator that shows how the value of a set of assets is changingfor which it collects data from different companies or sectors of a market fragment.

These indicators are mainly used by the stock markets of different countries of the world and each of them can be integrated by firms with specific characteristics like having a similar market capitalization or belonging to the same industry, there are also some indices that 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 a company. Generally, if investors are not confident, stock values ​​tend to fall.

They are also working to measure the performance of an asset manager and allow investors to compare 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 carefully analyze how company stock prices tended to rise or fall together, he created two indexes: one that contained the 20 largest railway companies (because it was the largest industry in the era), as well as 12 shares of other types of companies

Currently in humanity there are various indices and They can cluster based on their geographic location, sectors, company size, or even asset class.For example, the American Nasdaq index is made up of the 100 largest companies mainly 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 being measured, but the main component is the market capitalization of each company that incorporates it. This is obtained by multiplying the daily value of the bond on the corresponding stock market by the total number of shares that are on the market.

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

Reading a stock market index also means observing its evolution over time. New indices always open at a fixed value based on security prices on their 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 may seem that the former has performed better. However, if the first started the day at 30,000 points and the other at 300, you can see that in percentage terms the gains for the second were considerable.

These 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, we must not forget the Nasdaq 100that connects 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. Also DAX 30, the main German index containing the most important companies of the Frankfurt Stock Exchange; there FTSE100 the London Stock Exchange; he CAC40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock exchange.

In the asian continentthe main stock market indices are the Nikki 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 most representative of China, consisting of the most important 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 the Latin American regionyou have the IPCwhich contains the 35 most consolidated 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.

Similarly, 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.