bearish day for the KOSPIwhich ended on Friday, August 19, with falls of 0.61%until the 2,492.69 points. The KOSPI scored a maximum volume of 2,510.72 points and a minimum of 2,492.69 points. The trading range for the KOSPI between its highest point and its lowest point (maximum-minimum) during this day stood at 0.72%.
In relation to the profitability of the last seven days, the KOSPI recorded a drop in 1.23%so that in the last year there is still a decrease in the 23.14%. The KOSPI stands a 16.61% below its maximum this year (2,989.24 points) and a 8.76% above its minimum price so far this year (2,292.01 points).
What is a stock index and what is it for?
a stock index It is an indicator that shows how the price of a certain set of assets changesfor which it collects data from different companies or sectors of a part of the market.
These indicators are mainly used by the stock exchanges of various countries and each of them can be integrated by firms with specific requirements such as having a similar stock market capitalization or belonging to the same type of business, in addition, there are some indices that only take into account a handful of shares to determine their value or others that consider hundreds of shares.
Stock market indices serve as 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. If investors lack confidence, share prices 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.
This type of indicators began to be used at the end of the 19th century after journalist Charles H. Dow. He looked closely at how company stocks tended to go up or down together in price, so he created two indices: one containing the top 20 railroad companies (since it was the biggest industry at the time), as well as 12 actions of other types of businesses
Currently in humanity there are various indices and they can be grouped according to their location, sectors, company size or even the type of assetFor 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 it calculated and how to read them?
Each stock index has its own way of calculating, but the main factor is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the title in the corresponding stock market by the total number of shares that are in the hands of investors.
Listed firms are required to present a balance of its composition. This report must be published every three or six months, as appropriate.
Reading a stock index also implies being careful of its evolution over time. Current indices always open with a fixed value based on security prices on your start date, but not everyone follows this method. Therefore, it may seem misleading.
If one index adds 500 points in a day, while another only adds 20, it might seem that the first index performed better. However, if the former started the day at 30,000 points and the other at 300, it can be concluded that, in percentage terms, the gains for the latter were considerable.
Major stock indices
Between the major US stock indices There 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. Lastly, it is worth mentioning the Nasdaq 100which associates 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 eurozone. On the other hand, the DAX 30, the main German index containing the strongest companies on the Frankfurt Stock Exchange; the FTSE100 from the London Stock Exchange; the ACC 40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock market.
In Asiathe main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, is seen as 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.
Talking about the Latin American regionyou have the CPIwhich contains at 35 most outstanding firms of the Mexican Stock Exchange (BMV). At least a third of them are part of the estate of tycoon Carlos Slim.
Another is the Bovespa, made up of the 50 most important companies on the São Paulo stock exchange; the merval from Argentina; the IPSA From Chile; the MSCI COLCAP from 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 Americawhich 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 100made up of the 100 most powerful multinational firms on the planet.