The Largest Stock Exchanges by Market Capitalization of Their Listed Companies

 

· NYSE (New York Stock Exchange) – USA, New York City

· NASDAQ (stock market for mainly technology shares) – USA

· London Stock Exchange – UK

· Tokyo Stock Exchange – Japan

· Hong Kong Stock Exchange – Hong Kong

· Shanghai Stock Exchange - China

Generally, the stocks of the largest companies are traded on the NYSE, sometimes known as the “Big Board”, the oldest in the US. NYSE is located at 11 Wall Street in New York City. It is by far the world’s largest stock exchange by market capitalization of its listed companies at US$16.6 trillion as of February 2015. Average daily trading value was approximately US$169 billion in 2013. Operated by NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., NYSE offers a broad and growing array of financial products and services in cash equities, futures, options, exchange-traded products (ETPs), bonds, etc. Featuring more than 8000 listed issues it includes 90% of the Dow Jones Industrial Average and 82% of the S&P 500 stock market indexes volume.

The NASDAQ Stock Market commonly known as the NASDAQ (National Association of Securities Dealers Automated Quotations System) is an American stock exchange situated in New York City. In terms of market share and volume traded it is the largest stock exchange in the US. It was founded in 1971 being the world’s first electronic stock market. NASDAQ eventually assumed the majority of major trades formerly executed by the over-the-counter (OTC) system of trading. It was also the first stock market in the US to start trading online. At present it trades shares of more than 3200 companies. NASDAQ is the stock market for mainly technology shares (electronics, software, etc.). Its main index is the NASDAQ Composite. Stock market is also followed by S&P 500 index.

The London Stock Exchange (LSE) is the oldest and third-largest stock exchange in the world by market capitalization (US$6.06 trillion as of December 2014). The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul’s Cathedral. It is the most international of all the world’s stock exchanges, with around 3,000 companies from 70 countries admitted to trading on its markets. The LSE runs several markets for listing, giving an opportunity for different sized companies to list. There are two main markets on which companies trade on the LSE: 1. Main Market, which is home to over 1,300 large companies from 60 countries. The FTSE 100 Index (Financial Times Stock Exchange 100 Index) (“footsie”) is the main share index of the 100 most highly capitalized UK companies listed on the Main Market. 2. Alternative Investment Market (AIM), which is LSE’s international market for smaller growing companies. There are also several electronic platforms on which the different products trade.

The Tokyo Stock Exchange or TSE, for short, is a stock exchange located in Tokyo, Japan. It was established in 1878. Now it is the fourth largest stock exchange market in the world by aggregate market capitalization of its listed companies. It had 2,292 listed companies with a combined market capitalization of US$ 4.09 trillion as of April 2015. Stocks listed on the TSE are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers (Market of the high-growth and emerging stocks). As of October 31, 2010, there were 1,675 First Section companies, 437 Second Section companies and 182 Mothers companies. One of the main indices tracking the TSE is Nikkei 225.

The Hong Kong Stock Exchange (HKSE) is a stock exchange located in Hong Kong, Victoria City. It is Asia’s second largest stock exchange in terms of market capitalization behind the Tokyo Stock Exchange (US$2.96 as of January 2014), and the fifth largest in the world. As of November 2013, the HKSE had 1,615 listed companies, 776 of which are from mainland China, 773 from Hong Kong and 102 from abroad. Hong Kong’s first formal stock market dates back to 1891 when the Association of Stockbrokers in Hong Kong was established.

The Shanghai Stock Exchange (SSE) was established in 1990 and is the world’s sixth largest stock market by market capitalization (US$2.3 trillion as of December 2011). It is one of the two stock exchanges operating independently in the People’s Republic of China, the other is the Shezhen Stock Exchange. Unlike the Hong Kong Stock Exchange, the SSE is not entirely open to foreign investors. The main reason is tight capital account controls by Chinese authorities. The securities listed at the SSE include the three main categories of stocks, bonds, and funds. Bonds traded on SSE include treasury bonds (T-bond), corporate bonds, and convertible corporate bonds.

 

Discussion

Find all the information from the text about the following:

1. The largest stock exchange by market capitalization.

2. The world’s first electronic stock market.

3. The main markets that trade on the London Stock Exchange.

4. The first Asian stock exchange in terms of its establishing and market capitalization.

5. The second largest Asian stock Exchange.

6. The largest Chinese stock market.

 

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Stock Market Indices

Performances of various stock markets are followed by stock indices. A stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. There are indices for almost every conceivable sector of the economy and stock market. Many investors are familiar with these indices through index funds and exchange-traded funds whose investment objectives are to track the performance of a particular index.

World’s most important indices are the Dow Jones Industrial Average, Standard & Poor’s 500 (S&P 500), NASDAQ 100, FTSE 100.

The Dow Jones Industrial Average (DJIA) is the most widely quoted stock index. The DJIA is an index of 30 “blue chip” stocks of U.S. industrial companies. It is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. Dow compiled the index as a way to track the performance of the industrial component of America’s stock markets. It is the oldest continuing U.S. market index. It includes a wide range of companies from very important sectors like financial services, computers, information technology, pharmaceuticals, but excludes transportation and utility companies, which are included in separate indices. Most famous international American companies included are Bank of America, Dupont, Coca-Cola, Microsoft, Pfizer, etc. This helps them to predict the market very easily. When the index rises, the market is on the rise, and when it falls, the market is declining.

The “industrial” portion of the name of this index is largely historical – many of the 30 modern components have little to do with heavy industry. Besides, unlike many other indices, the DJIA is not a “weighted” index, meaning it does not take market capitalization into account.

Standard & Poor’s 500 is one of the most commonly used benchmarks for the overall U.S. stock market. It is an index of 500 large-cap companies from a variety of leading industries within the U.S. economy. It includes industrial, utility, transportation, and financial stocks.

NASDAQ-100 Index is a “modified capitalization-weighted” index designed to track the performance of the 100 largest and most actively traded non-financial domestic and international securities listed on The Nasdaq Stock Market. To be included in the Index, a stock must have a minimum average daily trading volume of 100,000 shares. Generally, companies on the Index also must have traded on Nasdaq, or been listed on another major exchange, for at least two years.

The FTSE 100 Index (Financial Times Stock Exchange 100 Index,pronounced footsie) is a share index of the 100 largest companies listed on the London Stock Exchange, begun on January 3, 1984. The index is seen as a barometer of success of the British economy and is the leading share index in Europe. It is maintained by the FTSE Group, and now independent company which originates as a joint venture between the Financial Times and the London Stock Exchange (hence the abbreviation Financial Times Stock Exchange). The FTSE 100 companies represent about 80% of the UK share market.

Most of the companies listed on this index usually include the abbreviation plc at the end of their name, indicating their status of public limited company. Most important companies in FTSE 100 are BP, Royal Dutch Shell, HSBC (Hong Kong and Shanghai Banking Corporation, which refers to both the UK and Hong Kong as its “home markets”), Unilever, Vodafone and some others.

 

 

Discussion

Say a few words about the following items:

1. The stock index of 30 “blue chip” stocks of US industrial companies.

2. One of the most commonly used standards for the US stock market.

3. The demand for companies to be listed on the NASDAQ-100 Index.

4. The leading share index in Europe.

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