An overview of stock indices across the world
In this article we will make ourselves familiar with the various stock indices used across the globe. But before we get into the details let us go through what a stock index is all about and why do they exist.
A stock market index is a statistical indicator used to measure and report changes in the stock market value of a group of important stocks in the market. For example, in India we have NIFTY (Group of 50 stocks) and Sensex (Group of top 30 stocks, also known as BSE 30) as the most important and highly followed stock indices. The value of these indices thus indicates how the most important stocks have been performing over a period of time, thus give us an indication of the overall market’s performance.
Some internationally recognised stock indices include the following-
- BBC Global 30– It is run as a global economic barometer, started by the BBC. It contains a mixture of 30 of the most important stocks from Asia, Americas and Europe. It is a very volatile index because many of these companies have had major profits or losses over the past few years at different points of time.
- S&P Global 1200– It is a free-float weighted global index that belongs to Standard & Poor’s, covering 31 countries and about 70 percent of global market capitalization.
- MSCI World– It consists of 1606 stocks from around the world. It includes a collection of stocks from all the developed markets in the world comprising of stocks from 23 countries.
- MSCI All Country World Index (ACWI)– It is another index owned by MSCI which also includes stocks from emerging economies combined with developed economy markets.
- iShares MSCI EAFE Index (EAF)– This is another stock maintained by Morgan Stanley Capital International for the purpose of providing investment results equivalent to publicly traded securities in the Far Eastern, Australasian and European markets.
Some of the highly followed stock market indices in the United States include-
- AMEX Composite- It is a market capitalization- weighted index (Weight of stock depends on price of the shares and how many are outstanding). It consists of stocks representing the NYSE Amex equities market.
- Dow Jones Indices- Dow Jones is the leading global indices provider.
- Dow Jones Industrial Average- Consisting of the United State’s 30 largest publicly traded firms’ stocks, it is one of the most widely quoted of the market indices.
- Dow Jones Wilshire 5000- It is designed such that it can track performance of all publicly traded firms in the US.
- NYSE Composite- It consists of New York Stock Exchange’s all commonly traded stocks.
- S&P 500- It contains stocks of the United State’s 500 Large-Cap companies. Comprises over 70% of the total market cap of all stocks traded in the U.S.
- NASDAQ Composite- It is a broad market index consisting of the common stocks and similar securities listed on the NASDAQ stock market. It has over 3000 stocks and consists of some non-US stocks as well.
In the Asian stock markets, S&P Asia 50 is the most famous index, also a part of the S&P Global 1200. It includes companies from stock exchanges in South Korea, Hong Kong, Singapore and Taiwan. Dow Jones Asian Titans 50 Index and Dow Jones Asia/Pacific Small-Cap Total Stock Market Index (DWAPS) are some of the other major stock indices in the continent. Some of the country specific stock indices of Asia are as follows-
- SSE Composite (China) – It is an index of all A Shares and B Shares listed on the Shanghai Stock Exchange.
- Hang Seng Indices (Hong Kong) – It represents about 67% market Cap of the Hong Kong Stock Exchange.
- As mentioned above, BSE SENSEX 30 and S&P CNX NIFTY are the most famous indices in India.
- Nikkei 225 (Japan) – It is the Tokyo Stock Exchange market index.
- JSX Composite (Indonesia) – It consists of all stocks traded on Jakarta Stock Exchange.
- KOSPI (South Korea) – Index consisting of all commonly traded stocks on Korean Stock Exchanges.
- TSEC (Taiwan) – It is a capitalization-weighted stock index consisting all the common shares on the Taiwan Stock Exchange.
- Straits Times Index (Singapore)- Capitalization-weighted index regarded as benchmark for Singapore stock market.
- FTSE Bursa Malaysia Index – Covers all companies listen on Bursa Malaysia Main Board. It is a comprehensive range of real-time indices.
- PSEi Index (Philippines) – It is PSE’s only broad-based index, also indicating the general state of Philippine’s economy.
In the Pacific region there is the NZX 50 for New Zealand’s stock exchanges and All Ordinaries for shares listed on the Australian Stock Exchange.
Major indices indicating the overall state of Europe’s stock market are-
- S&P Europe 350 – Part of the S&P Global 1200, it is drawn from 17 major European markets and covers about 70% of Europe’s market Cap.
- Dow Jones Euro Stoxx 50 – Market capitalization-weighted stock index of 50 blue-chip European companies operating within the Eurozone nations.
- OMX Baltic Index – Covers exchanges from Latvia, Estonia and Lithuania.
- FTSEurofirst 300 – Capitalization-weighted price index using free-float. It measures the performance of Europe’s largest 300 companies by Market Cap.
In the Middle East we have, TA-25 for the Tel-Aviv Exchange in Israel, ASE Market Capitalization Weighted Index for Jordan and MSM 30 for Oman’s stock exchanges.
For South America, iShares S&P Latin America 40 Index (ILF) is the most sought after stock index. Additionally, MERVAL Index is for the Buenos Stock Exchange (Argentina), Bovespa Index for about 50 stocks on the Sao Paulo Stock Exchange (Brazil) and Indice de Precios y Cotizaciones (IPC) for Mexico.
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