This year the markets have registered a constant volatility. (Infobae)
Opening of the session without major changes for the ATX, which begins the session on Tuesday, February 21 with a variation of 0.04%, up to 3,488.99 points, after the opening. Comparing this data with that of past days, the ATX chains three successive dates of descent.
Taking into account the last week, the ATX accumulates an increase of 0.89%; although in the last year it still maintained a decrease of 0.49%. He ATX it stands 0.34% below its maximum so far this year (3,500.85 points) and 10.42% above its minimum price for the current year (3,159.71 points).
What is a stock index and what is it for?
A stock index is an indicator that measures how the value of a certain set of assets evolves, therefore it collects 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 one of them can be integrated by firms with specific characteristics, such as having a similar market capitalization or belonging to the same type of industry. In addition, there are some indices that only 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 shares and shares of an entity. Generally, if investors do not have confidence, the costs of shares will tend to fall.
They also work to measure the performance of an asset manager and allow investors to make a comparison between return 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
Today in humanity there are various indices and they can be grouped based on their geography, sectors, the size of the companies or even the type of asset, for example, the US Nasdaq index is made up of the 100 largest companies in large measure 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 daily value of the share in the corresponding stock market by the total number of shares that are in the market.
The companies that are in the stock market are obliged to present a balance sheet of their composition. Said report must be notified every three or six months, as the case may be.
Reading a stock index also involves examining its changes over time. Current indices always open at a fixed value based on the prices of the securities on their start date, but not all follow this method. Therefore, it can be a source of misunderstandings.
If one index grows 500 points in one day, while another only gets 20, it might appear that the former outperformed. However, if the former started the day at 30,000 points and the other at 300, it can be deduced that, in percentage terms, the gains for the latter were higher.
These are the main stock indices
Among the main stock 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, comes the Nasdaq 100, which links 100 of the largest non-financial firms.
On the other hand, the most important indices in Europe are the Eurostoxx 50, which covers the 50 most important companies in the euro area. On the other hand, the DAX 30, the main German index that contains the strongest 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. Likewise, the SSE Composite Index, which appears as the most notable in China, made up of the most relevant companies on the Shanghai Stock Exchange. The same role played by the Hang Seung Index in Hong Kong and the KOSPI in South Korea.
Regarding the Latin American region, there is the IPC, which contains the 35 most consolidated firms on the Mexican Stock Exchange (BMV). At least a third of them are owned by 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.
There are also 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