This year the markets have registered a constant volatility. (Infobae)
Negative day for the Mexican S&P/BMV IPC index, which begins the session on Monday, January 30 with slight decreases of 0.31%, to 54,604.48 points, after the opening. Regarding the changes of this day with respect to previous days, the Mexican S&P/BMV IPC index accumulates two consecutive days in negative values.
In relation to the last week, the Mexican S&P/BMV IPC index marks a rise of 0.48%, so that for a year it has still accumulated a rise of 6.38%. The Mexican S&P/BMV IPC index stands 1.01% below its maximum this year (55,164.01 points) and 11.45% above its minimum valuation for the current year (48,993.24 points). .
Stock indices… What for?
A stock index is an indicator that shows how the value of a set of assets changes, so it uses data from various companies or sectors of a part of the market.
These indicators are mainly used by the stock markets of various nations and each one of them can be made up of firms with certain characteristics, such as having a similar market capitalization or belonging to the same type of industry. Also, there are some indices that only take consider a handful of shares to determine its 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 performance of investments in stocks and shares of a company. If investors are not confident, share prices will tend to fall.
Likewise, they work to measure the performance of an asset manager and allow investors to compare 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 carefully investigate how the shares of companies tended to rise or fall together in price, he created two indices: one that contained the 20 largest railway companies (as it was the most important industry at the time), as well as 12 shares of other types of businesses
Currently there are various indices and they can be grouped based on their geography, sectors, company size or even the type of asset, for example, the US Nasdaq index is made up of the 100 largest companies mostly related to technologies 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 calculating, but the main factor is the market capitalization of each company that is part of it. This is obtained by multiplying the value of the share on the corresponding stock market by the total number of shares that are on the market.
Firms that appear on the stock market are required to present a balance sheet of their composition. Said report must be made public every three or six months, as the case may be.
Reading a stock index also requires observing its changes 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 sees an increase of 500 points in one day, while another only gets 20, it might appear that the former performed better. However, if the former started the day at 30,000 points and the other at 300, it can be derived that, in percentage terms, the gains for the latter were larger.
These are the main stock indices
Among the main US stock indices is the Dow Jones Industrial Average, better known as Dow Jones, of which 30 companies are part. Likewise, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, the Nasdaq 100 appears, which unites 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, the main stock indices are 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 notable in 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 consolidated firms on the Mexican Stock Exchange (BMV). At least a third of them are part of the patrimony 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.
Similarly, 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.
Leave a Reply