The South Korean market opened in negative territory on February 21

Negative day for KOSPIwhich begins the day on Tuesday, February 21 with slight decreases in the 0.21%until the 2,450.05 dots, after opening. Compared to earlier dates, the KOSPI reverses the price of the previous session, in which it ended with a rise of 0.98%, without being able to establish a stable trend in recent days.

In the past seven days, the KOSPI marks a decrease of 0.63%For this reason, last year there was again a decrease in the 8.46%. He KOSPI is located at 1.37% below its maximum this year (2,484.02 points) and a 10.43% above its minimum score for the current year (2,218.68 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 given set of assets is changingfor which you need to have data from various companies or sectors in a part of the market.

These indicators are mainly used by stock exchanges in various countries 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 company, moreover, there are 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 prices tend to fall.

They are also working to measure the performance of an asset manager and they allow investors to make a comparison 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 indices: one that contained the 20 largest railroad companies (since that was the largest industry at the time), as well as 12 shares of other types of companies

There are currently various indices and they can partner based on their geographic location, industries, company size, or even asset typeFor 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 to read an index?

Each stock index has its own calculation method, but the main factor is the market capitalization of each company that incorporates it. This is obtained by multiplying the value of the security 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 submitted every three or six months, as the case may be.

Reading a stock market index also requires analyzing its evolution over time. New indices always start with 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 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 terms of percentage, the gains for the second were greater.

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. Also S&P500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, we must mention 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. Him too DAX 30, the main German index containing the most outstanding companies on 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 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 notable in China, consisting of the most important companies on 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 prestigious companies on the Mexican Stock Exchange (BMV). At least a third of them belong to 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.