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Bovespa of the Sao Paulo stock exchange opened this August 11 with an increase of 0.95%

A good start for the bovespathe session begins on Thursday, August 11, with increases in 0.95%to the 111,279.57 points, after the start of the open session. Comparing these data with the data of the past days, the bovespa chain of eight consecutive dates in a positive.

If we consider last week’s data, the bovespa rising scores of 5.09%; on the other hand, in year-on-year terms, it still accumulates a decrease in 9.54%. The IS bovespa one stands 8.46% below its maximum this year (121,570 points) and a 15.77% above its minimum price so far this year (96,121 points).

What is a stock index and what is it for?

stock index it is an indicator that shows how the price of a set of assets changestherefore it uses data from different companies or sectors of a part of the market.

These indicators are used mainly by the stock exchanges of countries and companies with specific characteristics can integrate each for example having a similar market capitalization or belonging to the same industry, in addition, there are some indexes that consider only a handful of shares to determine their value or others that consider hundreds of shares.

Stock market indices act 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 company shares. If investors lack confidence, equity costs tend to fall.

They also work for the asset manager performance and enable investors to compare profitability and risk; the opportunities of measuring a financial asset or creating portfolios.

This type of indicators began to be used at the end of the 19th century after journalist Charles H. Dow. to carefully analyze how company stocks tended to go up or down together in price, so he created two indexes: one containing the top 20 railroad companies (since it was the largest industry at the time), as well as 12 actions of other types of businesses.

Today there are various indexes and they can be grouped by location, sector, company size or asset typeFor example, the US Nasdaq index consists of the 100 largest companies mainly 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 way of measuring it, but the main component is the market capitalization of each firm that integrates it. This is obtained by multiplying the day’s value of activity on the corresponding stock market by the total number of shares on the market.

Listed firms are required to present a balance of its composition. This report must be published every three to six months, as the case may be.

To read a stock index one must also be careful about its variations over time. Current indexes always start with a fixed value based on stock prices on your start date, but not everyone follows this method. Therefore, it can be misleading.

If one index grows 500 points per day, while another index only gains 20, it may appear that the first index performed better. However, if the first day started at 30,000 points and the next day at 300, it can be concluded that, in percentage terms, the gains were significant for the latter.

Major stock indices

Between the major US stock indexes There is the Dow Jones Industrial Average, better known Dow Jones, which consists of 30 companies. Similarly, the S&P 500, comprised of 500 of the largest companies on the New York Stock Exchange. Finally comes the 100 headswhich unites 100 of the largest non-financial firms.

On the other hand, the most significant indexes of Europe is the Eurostoxx 50, covering the 50 largest companies in the eurozone. On the other hand, the DAX 30, Germany’s main index of the largest outstanding companies on the Frankfurt Stock Exchange; the FTSE 100 from the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35of the Spanish stock market.

I Asiathe IS Nikkei 225, comprising the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, seen as the most prominent in China, consists of the most relevant companies on the Shanghai Stock Exchange. The same role played by Hang Index Seung in Hong Kong and the KOSPI in South Korea.

Talking about it Latin Americathe IS IPCin which swelling 35 most consolidated companies of the Mexican Stock Exchange (BMV). At least a third of them belong to the capital of the tycoon Carlos Slim.

Another is the bovespa, composed of the 50 most important companies on the São Paulo stock exchange; the Merval from Argentina; the IPSA From Chile; the COLCAP MSCI from Colombia; the IBC de Caracas, made up of 6 companies from Venezuela.

Also, 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.

Likewise, the MSCI World, including 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 World 100made up of the 100 most powerful multinationals in the world.

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