South Korea’s main index closed lower on February 22

Bearish day for the KOSPIwhich closed the session of Wednesday, February 22 with notable declines in the 1.68%until the 2,417.68 dots. He KOSPI reached the maximum number of 2,435.98 points and a minimum volume of 2,416.16 points. The trading range for the KOSPI between its highest point and its lowest point (maximum-minimum) during this day, it was at the 0.81%.

Compared to the last seven days, the KOSPI accumulates a drop of 0.42% and for a year he still maintains a decrease in the 11.43%. He KOSPI is located 2.67% below its maximum this year (2,484.02 points) and a 8.97% above its floor rate for the current year (2,218.68 points).

Stock market indices… What for?

a stock market index It is an indicator that measures the price movement of a certain set of assets.it therefore collects data from different companies or sectors of a part of the market.

These indicators are mainly used by the exchanges of each country and each of them can be integrated by firms with specific characteristics like having a similar market capitalization or belonging to the same type of industry, furthermore, 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 the company. Generally, 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 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

There are currently various indices and they can group together based on geography, industries, company size, or even asset classFor 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 factor is the market capitalization of each company that incorporates it. This is obtained by multiplying the daily value of the bond in the corresponding stock market by the total number of shares outstanding in 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 start with a fixed value based on stock prices on their start date, but not everyone follows this method. So it can be confusing.

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

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, we must mention 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. Also SSE composite index, which can be considered the most notable in 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 influential 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.