This year the markets have registered a constant volatility. (Infobae)
No change login for the ARE 100, which opens the session on Tuesday, January 24 with a variation of 0.29%, up to 5,388.96 points, after the opening. In relation to previous dates, the ARE 100 chains two successive days of descent.
If we consider the data of the last week, the ARE 100 marks an increase of 1.39%, so in year-on-year terms it still maintains a rise of 177.06%. The ARE 100 it stands 4.81% below its maximum this year (5,661.10 points) and 13.96% above its minimum valuation so far this year (4,728.88 points).
What is a stock index and what is it for?
A stock index is an indicator that shows how the price of a certain set of assets changes, for which it takes data from different companies or sectors of a part of the market.
These indicators are used mainly by the stock markets of various countries and each of them can be made up of companies with specific characteristics, such as having a similar market capitalization or belonging to the same industry; likewise, there are some indices that only consider a fist. of shares to determine their value or others that consider hundreds of shares.
Stock indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the return on investment in a company’s stocks and shares. If investors don’t have confidence, stock values tend to fall.
Likewise, they work to measure the performance of an asset manager and 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. carefully observed how the shares of the companies tended to rise or fall together in price, so he created two indices: one that contained the 20 most important railway companies (since it was the most important industry at the time), as well as 12 shares of other types of businesses
Today there are various indices and they can be put together based on their geographical location, sectors, company size or asset type, for example, the US Nasdaq index is made up of the 100 largest companies mostly 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 way of being measured, but the main factor is the market capitalization of each company that integrates it. This is obtained by multiplying the daily value of the share in the corresponding stock market by the total number of shares that are in circulation in the market.
Firms that appear on the stock market are required to present a balance sheet of their composition. Said report must be delivered every three or six months, as appropriate.
Reading a stock index also implies taking into account its variations over time. Today’s indices always start with a fixed value based on the stock prices on their start date, but not all follow this method. So it can be confusing.
If one index adds 500 points in a day, while another only adds 20, it might appear that the former outperformed. But, if the former started the day at 30,000 points and the other at 300, you can see that, in percentage terms, the gains for the latter were more remarkable.
These are the main stock indices
Among the main stock market indices in the American Union is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Similarly, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, we must mention the Nasdaq 100, which associates 100 of the largest non-financial firms.
On the other hand, the most prominent indices in Europe are the Eurostoxx 50, which covers the 50 most important companies in the euro area. In addition, the DAX 30, the main German index that contains the most prominent companies on the Frankfurt Stock Exchange; the FTSE 100 of the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35, of the Spanish stock market.
On the Asian continent, we have the Nikkei 225, made up of the 225 most important companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which is seen as the most representative of China, made up of the most relevant companies on the Shanghai Stock Exchange. Similarly, it is worth mentioning the Hang Seung Index in Hong Kong and the KOSPI in South Korea.
With regard to Latin America, there is the IPC, which contains the 35 most outstanding firms on the Mexican Stock Exchange (BMV). At least a third of them belong to the capital of tycoon Carlos Slim.
Another is the Bovespa, made up of the 50 most important companies on the Sao Paulo Stock Exchange; the Merval from Argentina; the IPSA of Chile; the MSCI COLCAP of Colombia; the IBC of Caracas, made up of 6 companies from Venezuela.
Finally, there are other types of global stock indices such as the MSCI Latin America, which includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.
Similarly, there is the MSCI World, which includes 1,600 companies from 23 developed countries; the MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100, made up of the 100 most powerful multinational firms on the entire planet.
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