Rising day for the OMXS 30, which ended the session on Monday, January 9 with large increases of 2.54%, to 2,191.82 points. The OMXS 30 marked a maximum volume of 2,191.82 points and a minimum volume of 2,160.59 points. The trading range for the OMXS 30 between its highest and lowest point (maximum-minimum) during this day was 1.42%.
If we consider the data from the last week, the OMXS 30 registers a rise of 7.26%; although in interannual terms it still maintains a drop of 7.88%. and 5.59% above its minimum valuation so far this year (2,075.76 points).
What is a Stock Index And What is it For?
A stock index is an indicator that shows how the value of a certain set of assets changes, so 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 one of them can be made up of companies with certain characteristics, such as having a similar market capitalization or belonging to the same industry. There are also some indices that only take into account count 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 are not confident, stock prices tend to fall.
Likewise, they work to measure the performance of an asset manager and allow comparisons 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 associated 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 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 is a Stock Index Measured?
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 share on the corresponding stock market by the total number of shares that are on the market.
Firms listed on the stock market are required to present a balance sheet of their composition. Said report must be published every three or six months, as appropriate.
Reading a stock index also requires examining its changes over time. New 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.
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 first started the day at 30,000 points and the other at 300, it can be concluded that, in percentage terms, the gains for the second were higher.
The Main Stock Indices
Among the main stock market indices in the United States is the Dow Jones Industrial Average, better known as Dow Jones, of which 30 companies are part. 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 brings together 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 most outstanding 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.
In Asia, the main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, which can be considered the most notable in China, made up of the most prominent 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 prestigious 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.
This article is originally published on infobae.com