This year the markets have registered a constant volatility. (Infobae)
No change login for the PSI 20, which opens the day on Tuesday, February 28 with a variation of 0.09%, up to 6,020.37 points, after the opening. In relation to previous days, the PSI 20 puts an end to three sessions of streak.
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 used mainly by the stock markets of different 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. Also, 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 return on investment in a company’s stocks and shares. Generally, if investors are not confident, stock prices 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
Each stock index has its own calculation method, but the main component is the market capitalization of each firm that integrates it. This is obtained by multiplying the daily value of the bond in the corresponding stock market by the total number of shares that are in the market.
Companies listed 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 the case may be.
Reading a stock index also requires being careful of its changes over time. Today’s indices always start with a fixed value based on the prices of the securities on their start date, but not all follow this method. Therefore, it can lead to inaccuracies.
Among the main US stock indices is the Dow Jones Industrial Average, better known as Dow Jones, which is 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 links 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. 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 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 the Latin American region, there is the IPC, which contains the 35 most influential 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.
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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