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South Korea’s KOSPI index closes on December 13

This year the markets have registered a constant volatility.  (Infobae)
This year the markets have registered a constant volatility. (Infobae)

Session of slight movements for the KOSPIwhich ended the day on Tuesday, December 13 with a variation of the 0.03%until the 2,372.40 points. The KOSPI scored a maximum of 2,388.27 points and the minimum number of 2,364.87 points. The trading range for the KOSPI between its highest and lowest point (maximum-minimum) during this day it stood at the 0.98%.

Taking into account the last week, the KOSPI accumulates a drop in 0.87%so that in interannual terms it still maintains a decrease of 20.21%. The KOSPI a 20.64% below its maximum this year (2,989.24 points) and a 10.06% above its minimum price so far this year (2,155.49 points).

What is a stock index and what is it for?

a stock index It is an indicator that measures the evolution of the price of a certain set of assets.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 each country and each of them can be integrated by signatures with specific characteristics such as having a similar market capitalization or belonging to the same type of industry, there are also some indices that only consider a handful of shares to determine their value or others that consider hundreds of shares.

Stock indices serve as indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the performance of stock investments and company shares. 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 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 analyze 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 in our economy there are various indices and They can associate based on their location, sectors, company size or type of assetFor example, the US Nasdaq index is made up of the 100 largest largely technology-related companies 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 calculation method, but the main factor is the market capitalization of each firm that integrates it. This is obtained by multiplying the value of the day of the bond in the corresponding stock market by the total number of shares that are in the hands of investors.

Publicly traded companies are required to present a balance of its composition. Said report must be disclosed every three or six months, as appropriate.

Reading a stock index also implies noticing its evolution over time. New indices always appear with a fixed value based on stock prices on their start date, but not everyone follows this method. Therefore, it can be a source of misunderstandings.

If one index gains 500 points in a day, while another only gets 20, it might appear that the former performed better. 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 larger.

The main stock indices

Between the major US stock indices is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Also, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, it is necessary to mention the Nasdaq 100which unites 100 of the largest non-financial firms.

On the other hand, the most important indices of Europe are the eurostoxx 50, which covers the 50 largest companies in the euro area. On the other hand, the DAX 30, the main German index containing the strongest companies on the Frankfurt Stock Exchange; the FTSE 100 from the London Stock Exchange; the ACC 40 from the Paris Stock Exchange; and the IBEX 35from the Spanish stock market.

In the asian continentwe have the nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which can be considered 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.

Talking about Latin Americayou have the CPIwhich contains the 35 most prestigious 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 From Chile; the MSCI COLCAP from Colombia; the IBC de Caracas, made up of 6 companies from Venezuela.

Similarly, there are other types of global stock market indices such as the MSCI Latin Americawhich includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.

Similarly, there is 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 100made up of the 100 most powerful multinational firms on the entire planet.

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