Stock indices

What are stock indices?

A stock index is a indicator which measures the profitable variations of the shares of the companies that compose it.

The companies that make up a stock index generally share common characteristics, such as belonging to the same industry or stock exchange. For example, the NASDAQ index is comprised primarily of technology organizations.

Types of stock indices

Stock indices are classified according to the type of companies that comprise it:

• Global stock indices: companies worldwide.
• International stock indices: companies belonging to one country or several.
• National stock indices: companies from a particular country.
• Sectoral stock indices: companies located in a single sector.
• Cross-sector stock indices: any type of company.
• Commodity stock index: specialized in different companies that commercialize materials such as gold, silver and oil.

Functions of stock indices

A stock index performs several important functions:

• It serves as a reference for the actors in a market.
• Functions as actual status report of an economy, business sector or industry, without the need for each of the companies belonging to these segments to be analyzed.
• Allows companies to meet the requirements solvency, government policies and financial transparency.
• Record economic performance of any company or industry and makes it evolve according to its prices.

Main stock indices

The following are relevant stock indices worldwide and that serve as a reference for their economies:

USA

In recent years, the US indices have been the most prominent worldwide. Among them are:

• NYSE: New York Stock Exchange, where more than 3,000 companies are listed.
• Dow Jones: located in New York, United States.
• NASDAQ: also located in New York, it has more than 3,800 technology companies.

Latin America

• CPI: made up of 35 companies listed on the Mexican Stock Exchange.
• Merval: made up of 28 companies from the Buenos Aires Stock Market.
• COLCAP: made up of more than 20 companies listed on the Colombian Stock Exchange.
• IPSA: located in Chile, it is made up of 40 companies on the said country's stock market.

Asia

In Asian countries, the leading stock indices are:

• Nikkei 225: located in Tokyo, Japan. Comprised of more than 250 companies listed on the Tokyo Stock Exchange.
• Hang seng: Hong Kong Stock Exchange, made up of the 33 main companies on the Hong Kong Stock Exchange.
• SSE Composite: located in Shanghai, China. Composed of more than 50 companies.