World stock indices. Stock indices American stock market indices online
They are highly attractive for trade. The explanation for this is quite simple. Stock indices have many undeniable advantages that allow you to implement various trading strategies: Accessibility of economies of different countries.
High and stability.
The United States is the most significant and developed, so it is widely in demand by traders and investors around the world.
Nikkei is an index operating on the Tokyo Stock Exchange. Based on securities of 225 Japanese enterprises. Operating since 1950. The list includes companies whose securities are sold and purchased on the stock exchange as actively as possible. The listing is updated at least once a year. The Hang Seng is the most influential index in Hong Kong. Operating since 1964. Based on securities of 34 largest companies in the state. The index reflects the dynamics of the country's economy. The list represents companies from various industries. But since 1985, the exchange has been calculating four additional indicators - by area of activity.
KOSPI is one of the main indicators of the Seoul Exchange. This is an analogue of the Dow Jones indicator adapted to Asia. Based on all securities listed on the exchange, which allows you to track general trends in the North Korean economy. The list includes 399 enterprises.Let's summarize
Stock indices are intangible but highly liquid. You can trade them using exchange options, futures contracts and CFDs. Each method has its own advantages.
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Today I want to look at the main stock indices, and at the same time touch on Russian ones, which may be of interest to investors in mutual funds. A synonym for the name is stock indices. Stock indices represent a weighted average of stock quotes selected on some basis: for example, by the capitalization of the companies included in it. The larger the company's capitalization, the higher its share in the index. In addition, there may be indices of stocks that pay stable or high dividends, stocks of a certain sector (for example, high technology), etc.
Many professional investors use the S&P500 chart in their analysis, believing that this index most accurately reflects the overall picture of the state of the American economy. At the same time, you can find quotes from this chart both in a “standard” form (pure return, S&P500 PR or simply S&P500), and taking into account reinvested dividends (total return, S&P500 TR).
NASDAQ Index
The NASDAQ stock index reflects the quotations of securities of US high-tech companies on the NASDAQ exchange (National Association of Securities Dealers Automated Quotations). It is published by the National Securities Trading Association. The NASDAQ index is calculated similarly to the S&P500, only the value of shares as of 02/05/1971 is taken as the basis (base), with the base value being 100. To calculate the NASDAQ composite stock index, the values of the rates of all ordinary shares traded in its system (at the moment) are used this is more than 4,200 shares). The largest representatives of the index: Apple, Microsoft, Google, Amazon and Facebook.
Associated with this index is the so-called ““, which inflated in 1995-2000. Dot-coms are companies that conduct their business via the Internet; expectations from this business, both according to the forecasts of many experts and the media, were very high, which led to a greatly inflated valuation of such companies. As a result, the index plummeted downward. True, at that time it did not yet contain such giants as Google and Apple, so today it has higher stability. However, the index is not the holy grail, and this should not be forgotten.
DJIA Index (Dow Jones Industrial Average)
The so-called Dow Jones Industrial Average is the oldest stock index in existence. It is compiled based on the prices of 30 issues of shares of industrial companies, which are selected based on their market valuation and the degree of distribution among a large number of investors. The second most important stock index in America, the behavior of which has a significant impact on the dynamics of the world securities market. Due to mergers and bankruptcies of companies, as well as due to the emergence of new strong players on the stock market, the list of stocks included in the DJIA index basket (as in all other cases) is regularly adjusted. The Dow Jones index itself is the arithmetic average of the prices of these stocks and has a very high correlation with the S&P500:
As you can see, the movement graphs of the two indices are very similar and reflect the state of the American economy.
NYSE Index (New York Stock Exchange)
Calculated similarly to the SP500 and NASDAQ indices, it covers all stocks that are traded on the New York Stock Exchange (namely about 2,200 shares). When calculating the index, a base value of 50 is used, which is the stock price as of December 31, 1965. It is clear that at the same time the NYSE exchange provides quotes online and for all stocks separately. Current index quotes.
DAX Index
This is the most important stock index in Germany, the index basket of which includes the prices of more than 30 shares of the largest companies that are traded on the Frankfurt Stock Exchange. It experienced a very strong decline in 2000-2003, exceeding the quotes of the peak of 2000 only in 2013. Unlike most indexes, it includes reinvested dividends.
FTSE100 index
Created in 1935 by the agency Financial Times and is the UK's oldest stock index. According to the current methodology, it has been monitored since 1984: the quotes take into account the shares of one hundred companies with different profiles of activity. The listing includes shares that are regularly selected by specialists, including representatives of the Financial Times newspaper. Quotes are very much in sync with the German index above - as a result, it makes sense for an investor to invest in a European stock fund without purchasing separate country funds.
CAC40 and CAC General indices
These main French indices are calculated by the Paris Bourse and the Society of French Exchanges and contain the 40 and 250 largest French companies in their index basket respectively. France makes a slightly smaller contribution to the European economy than Germany and England, but at the level of individual companies it has very powerful players.
Nikkei225 index
A Japanese stock index provided by the Tokyo Stock Exchange that describes the Japanese economy. To compile it, shares of 225 Japanese companies are used, and it is calculated using a method similar to the method for calculating the Dow Jones index. The index has the peculiarity of a giant peak in 1990 - in the 1980s, Japanese securities were wildly popular, which drove their prices sky high. At its peak, the capitalization of Japanese securities even overtook American ones, amounting to about 40% of the world market. The overheating was so great that even after a quarter of a century, the index quotes are very far from their peak.
What can you say about these graphs in general? At first glance, it seems that the behavior of most world stock indices is similar to each other and a portfolio assembled from them will not have good diversification due to the seemingly high . However, in practice, the American market at different periods of time can either noticeably lag behind foreign stocks or outperform them:
Let's move on to Russian indices - let's start with the largest.
MICEX Index
It is an effective capitalization-weighted stock index of the most liquid shares of Russian companies (blue chips) traded on Moscow Interbank Currency Exchange. The MICEX began to be calculated on September 22, 1997, then it was called the “MICEX Consolidated Stock Index”. Expressed in rubles . Its current name has been used since November 28, 2002. The methodology for calculating the MICEX index is a modern index management system, on the basis of which a special Index Committee operates, and which determines the principles for including securities in the index listing, based on expert assessment. Below I will give an assessment of Russian companies from the positive side.
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« Gazprom “- this company has solid gas reserves, transcontinental infrastructure, plus a well-functioning business. Dividends are paid annually. Not very generous, but it pays.
« Lukoil ". Of the Russian oil producing companies, Lukoil is the only company that is seriously building an international business. The main oil fields are in Russia. But Lukoil is trying to gain a foothold in the Middle East, Africa, and South America. Lukoil has a reasonable dividend policy. Regularly pays dividends. But a significant part of the profit goes to building an international business. Development of new fields, purchase of oil refineries, deployment of gas station networks. A very stable company.
« Surgutneftegaz ". The most generous with dividends in the entire Russian oil industry. But the company has a strange dividend policy. Gives out a lot of money to shareholders. And it accumulates a huge share of profits in bank accounts. It's unclear why. Several tens of billions of dollars have already accumulated there. Apparently, one day this money will be spent on something global. There are two types of shares of this company - ordinary and preferred. Preferred shares pay higher dividends than ordinary shares. I think it’s optimal to invest equally in both types of shares. Both stocks have significant growth potential.
« Sberbank ". The largest, the oldest. Extensive network, government participation. Earns profit, pays dividends. There is development potential. There are two types of shares - ordinary and preferred.
« Norilsk Nickel ". A very interesting company. Has mines all over the world. Global industry leader. Please note: not a national leader, but a global one. Pays dividends regularly.
« Magnet » - a chain of supermarkets. Every year there are more and more stores. Each one is constantly filled with shoppers. There are 4 Magnit supermarkets around my house within a 10-minute walk. And in each there is trade every day. Doesn't stop.
How can you invest in the Russian economy based on this index? There are three main options. First, buy all the shares in accordance with their shares in the index (this is quite expensive, although you can buy only ten major issuers, which requires several tens of thousands of rubles). Secondly, you can buy futures on the MICEX - this method requires familiarity with this instrument and the availability of collateral (GO, funds that are reserved in the trader’s account in the event of buying or selling a futures). Finally, you can buy a suitable index mutual fund, since there are about two dozen of them for this index.
If we look at the index results not by year, but by period, we can see that over a 10-year period, only two periods (1998-2008 and 2004-2014) gave zero returns (excluding dividends). The remaining periods of 10 years and more gave an average return of about 5-7% above inflation, not including dividends.
Dividend yield of the MICEX index
Speaking about index investing, it is necessary to keep in mind that any price index (including the MICEX) reflects only changes in stock prices of the companies included in it. As is known, the payment of dividends leads to a drop in stock prices by the amount of the payment - thus, the index (which is the sum of the prices of its constituent companies) shows the prices minus the dividend income of its constituent shares. Or you could say that the chart does not take into account dividends.
The average dividend yield of the MICEX index is about 3% - in mutual funds these dividends are not paid, but are reinvested, affecting the investor’s income. If an investor buys shares in the same ratio as in the index, then he has a choice: reinvest the dividends or withdraw them to his bank account. Over the period from 1997 to 2014, this increase, according to the calculations of Arsager’s company, would mean an increase investor capital by 70% compared to the “pure” index:
RTS Index
The base value of the RTS stock index is taken to be the number 100, based on the stock price base, denominated in US dollars . The RTS stock index appeared on September 1, 1995. Due to its peg to the US dollar, the RTS index is affected by fluctuations in the exchange rate of this currency - during the growth of the US dollar against the ruble, the RTS falls, while the strengthening of the ruble gives quotes additional growth. At one time, in conditions of high inflation, the RTS index was convenient for pegging its dynamics to the relatively stable US dollar. In total, the RTS index is calculated based on shares of 50 companies similar to the MICEX index. Current quotes.
The index is characterized by extreme volatility. Its history over 20 years shows 15 drawdowns of at least 30%, i.e. each such drawdown occurs on average once every year and a half - however, at the same time, in terms of profitability it is still ahead of the American index:
For games with this index, futures on the RTS index, presented on the Moscow Exchange, are very popular. For investing in foreign indices, the best tool is exchange-traded funds, which can be accessed by opening an account with a foreign broker. Plus, there are FinEX funds on the Moscow Exchange. I will talk about all this in the following articles.
We often hear that stock exchanges opened with indices rising by several percent. Or vice versa, the index fell by 50 points. The MICEX index rose by 24% over the year? And the RTS index fell by 2 times during the same time. What do all these words mean? How to understand whether the economy is growing or falling. What is the investment climate in the country? In this article we will look at what stock indices are, what they mean and where and what they are used for.
History of the origin of indices
The very first index was invented by Edward Jones and Charles Dow. It included 12 of the largest enterprises in the United States. The index was calculated quite simply: the arithmetic average of the composition of the companies included in it. And although since then the parameters for defining this index have undergone many changes, as has the number of companies included in it, at the moment it remains one of the most popular in the world. You've probably heard about him - DOW JONES Index.
What are stock indices
Let's imagine the picture. Hundreds, thousands, tens of thousands of shares of various companies are traded on the stock market. And every day some of them grow, others fall, and still others stagnate in a certain range. And how to determine the overall dynamics of the market? This is what stock indices are used for.
The essence of the index is as follows: Companies included in the index are selected based on a certain criterion and a certain value is derived based on certain calculations. This value or index value itself provides absolutely no information. The benefit of using indexes is the change in its values, which is taken either as a percentage or in points.
It is by the dynamics of changes in indices that one can judge whether the market is growing or falling. Those. if the index rises, it means that the shares of the majority of the companies included in it are growing, or at least those companies whose share in the index is growing are large enough to pull the index in their direction.
Let’s say in the MICEX index the share of the 4 largest companies (Gazprom, Sberbank, Magnit and Lukoil) is approximately 30%.
Using indices, you can measure various market parameters. There are industry indices that include only companies belonging to the same industry, for example, the financial sector, mechanical engineering, energy, etc. There are indices that include only the largest companies.
How are stock indices calculated?
The calculation of stock indices may involve various mechanisms. Initially it was just the arithmetic average. But such a calculation did not give an accurate idea of the market movement. All companies differ from each other in capitalization, and each of them should influence the country's economy in different ways. Therefore, at the moment, other methods of forming indices are used: (simple and weighted average, arithmetic and geometric average, and others). Each index has its own calculation mechanism.
The calculation of stock indices is carried out either by rating agencies or stock exchange agencies. The name of the index basically consists of an abbreviation and sometimes a number indicating the number of companies included in the index.
The most popular stock indices in the world
Dow Jones— Dow Jones Industrial Average. Probably the most popular index in the world. The membership includes 30 of the largest US companies from various industries: finance, transportation, consumer goods, food and industrial sectors. The index includes world-famous companies: Coca-Cola, IBM, Intel, MicroSoft, General Motors and others.
S&P 500— an index that includes the 500 largest US companies by capitalization. Therefore, the index itself can be used to judge how things are going in the country’s economy, since it affects all the main sectors of the country.
Nikkei 225— Japanese index, which includes 225 companies. The composition is reviewed annually. It includes such giants as Honda, Panasonic, Mazda and others. With a 99.9% probability, all Japanese brands that you know are included in the NIKKEI 225. Like the S&P 500, it fairly objectively reflects the state of the economy. The most important index in the Asian region.
DAX- German stock index, which includes the 30 most important companies in the country: Adidas, BMW, Henkel, Volkswagen and others.
FTSE 100— the most respected and quoted index on European exchanges. Among the 100 largest companies traded on the London Stock Exchange.
CAC 40- French stock index, which includes 40 largest companies traded on the Paris Stock Exchange: Renault, L'Oreal.
MICEX and RTS— 2 stock indices, including 50 of the most liquid and largest companies in Russia. The index includes such giants as Gazprom, Rosneft, Lukoil, Sberbank, Magnit, etc.
The calculation mechanism for Russian indices is absolutely the same. The difference is that the MICEX is calculated in rubles, and the RTS is calculated in dollars.
Available tickers:
Selected tickers:
10Y T-Note INT Rates 30Y T-Bond INT Rates 5Y T-Note INT Rates AKEUA AKNXA AKSPA ASX Australia BOVESPA Brazil BPSI CAC 40 CNYFIX CNYFIXME CNYRUBSFIX DAX 30 DJ Composite DJ Industrial DJ RUS Titans 10 DJ Telecommunications DJ Transport DJ Utilities EPSI EURFIX EURFIXME EURSFIX EURUSDFIX EURUSDFIXME EURUSDSFIX FTSE 100 FTSE/JSE Top40 GPBCBI2Y GPBCBI4Y GPBMA GPBSA Hang Seng IBEX Spain IMOEX MCFTR MCFTRN MCFTRR MCX BO 1W MCX BO 2W MCX BO ON MCX EQ 1W MCX EQ 2W MCX EQ ON MCX SM MEBCTR MEBCTRN MEBCTRR MECHTR MECHTRN MECHTRR MECNTR MECNTRN MECNTRR MEEUTR MEEUTRN MEEUTRR MEFNTR MEFNTRN MEFNTRR MEMMTR MEMMTRN MEMMTRR MEOGTR MEOGTRN MEOGTRR MESMTR MESMTRN MESMTRR METLTR METLTRN METLTRR METNTR METNTRN METNTRR MICEX MICEX 10 MICEX BMI MICEX CGS MICEX CHM MICEX FNL MICEX LC MICEX M&M MICEX MC MICEX MNF MICEX O&G MICEX PWR MICEX SC MICEX TLC MICEX TRN MICEX10INDEX MICEXBMI MICEXBORR1W MICEXBORR2W MICEXBORRON MICEXCBICP MICEXCBICP3Y MICEXCBICP5Y MICEXCBITR MICEXCBITR3Y MICEXCBITR5Y MICEXCGS MICEXCHM MICEXEQRR1W MICEXEQRR2W MICEXEQRRON MICEXFNL MICEXINDEXCF MICEX INNOV MICEXM&M MICEXMBICP MICEXMBIGP MICEXMBITR MICEXMNF MICEXO&G MICEXPWR MICEXSC MICEXTLC MICEXTRN MOEX10 MOEXBC MOEXBMI MOEXCH MOEXCN MOEXEU MOEXFN MOEXINN MOEXMM MOEXOG MOEXREPO MOEXREPO 1 week 12:30 MOEXREPO 1 week 19 :00 MOEXREPO USD 12:30 MOEXREPO USD 19:00 MOEXREPO share 12:30 MOEXREPO share 19:00 MOEXREPO GSU 1 week 12:30 MOEXREPO GSU 1 week 19:00 MOEXREPO GSU 12:30 MOEXREPO GSU 19:00 MOEXREPO region 12: 30 MOEXREPO region 19:00 MOEXREPO OFZ 12:30 MOEXREPO OFZ 19:00 MOEXREPO1W MOEXREPO1W region 12:30 MOEXREPO1W region 19:00 MOEXREPO1WE MOEXREPOE MOEXREPOEQ MOEXREPOEQE MOEXREPOUSD MOEXREPOUSD region 12:30 POUSD region 19:00 MOEXREPOUSDE MOEXTL MOEXTN MRRT MRSV MTEKA MXREPO MXREPO1W MXREPO1WE MXREPOE MXREPOEQ MXREPOEQE MXREPOUSD MXREPOUSDE MCXCBICP MCXCBICP3Y MCXCBICP5Y MCXCBIGP MCXCBIGP3Y MCXCBIGP5Y MCXCBITR MCXCBITR3Y MCXCBITR5Y NASDAQ 100 NASDAQ Comp Nikkei 225 OPSI RGBI RGBI-g RGBI-tr RGBITR RPGCC RPGCC KSU 12:30 RPGCC1W RPGCC1W KSU 12:30 RPGCC1WE RPGCC1WE KSU 19:00 RPGCCE RPGCCE KSU 19:00 RTS2 RTsch RTScr RTSeu RTSfn RTSI RTSin RTSmm RTSog RTSSIB RTSSM RTSSTD RTSSTDTR RTSSTDTRN RTSSTDTRR RTStn RTSTR RTSTRN RTSTRR RTSUSDCUR RTSVX RUABICP RUABITR RUBMI RUCBCP3Y RUCBCP5Y RUCBICP RUCBICP1Y RUCBICP3+ RUCBICPB3Y RUCBICPBB RUCBICPBB3 RUCBICPBB3+ RUCBICPBB3Y RUCBICPBB5 RUCBICPBB5Y RUCBICPBBB RUCBICPBBB3+ RUCBICPBB3Y RUCBICPBB5Y RUCBICPL1 RUCBICPL2 RUCBICPL3 RUCBITR RUCBITR1Y RUCBITR3+ RUCBITRB RUCBITRB3Y RUCBITRBB RUCBITRBB3 RUCBITRBB3+ RUCBITRBB3Y RUCBITRBB5 RUCBITRBB5Y RUCBITRBBB RUCBITRBBB3+ RUCBITRBBB3Y RUCBITRBBB5Y RUCBITRL1 RUCBITRL2 RUCBITRL3 RUCBTR3Y RUCBTR5Y RUCHTR RN RUCHTRR RUCNTR RUCNTRN RUCNTRR RUEU10 RUEUTR RUEUTRN RUEUTRR RUFNTR RUFNTRN RUFNTRR RUGBICP10Y RUGBICP1Y RUGBICP3Y RUGBICP5+ RUGBICP5Y RUGBITR10Y RUGBITR1Y RUGBITR3Y RUGBITR5+ RUMBI CP RUMBICP1Y RUMBICP3+ RUMBICP3Y RUMBICPBB RUMBICPBB3 RUMBICPBB3Y RUMBICPBBB RUMBICPBBB3+ RUMBICPBBB3Y RUMBICPL1 RUMBICPL3 RUMBITR RUMBITR1Y RUMBITR3+ RUMBITR3Y RUMBITRBB RUMBITRBB3 RUMBITRBB3Y RUMBITRBBB RUMBITRBBB3+ RUMBITRBBB3Y RUMBITRL1 RUMBITRL3 RUMMTR RUMMTRN RUMMTRR RUOGTR RUOGTRN RUOGTRR RUPCI RUPMI RURCEN RURNW RUURL RURVOL RUSFAR RUSFAR1M RUSFAR1W RUSFAR2M RUSFAR2W RUSFAR3M RUSFARUSD RUSMTR RUSMTRN RUSMTRR RUTLTR RUTLTRN RUTLTRR RUTNTR RUTNTRN RUTNTRR RVI S&P 100 S&P 500 SBCBA SBCBB SBGBA SBMXA SBRBA SBSPA SBSPB SENSEX India Shanghai Composite SRATE_CNY_ON SRATE_ED_ON SRATE_EUR_ON SRATE_USD_1M SRATE_USD_1W SRATE_USD_1Y SRATE_USD_2M SRATE_USD_2W SRATE_USD_3M SRATE_USD_6M SRATE_USD_9M SRATE_USD_ON TESTNAV USD Index USD1MFIX USD1WFIX USD1YFIX USD2MFIX USD2WFIX USD3MFIX USD6MFIX USD9MFIX USDFIX USDFIXME USDSFIX UX UXAG VIX Volatility Index VTBBA VTBEM VTBEM2 VTBHY VTBHY2 VTBSN VTBSN2 Val. profitability of the state region MICEX Index of second tier shares Index of broad market shares Index of the second tier of the Moscow Exchange Second tier index of the Moscow Exchange in dollars Index of blue chips of the Moscow Exchange State region index RGBI State region index RGBI TR State region index. MICEX State Regional Index MICEX-val Index of the state region. MICEX-sov.income Index of government bonds Index of government bonds-sov.income Index of corporate region MOEX CBICP Index of corporate region MOEX CBITR Index of corporate region MOEX CP 3 Index of corporate region MOEX CP 5 Index of corporate region MOEX TR 3 Index of corporate region MOEX TR 5 Index corporate bonds Corporate bond index - total income Moscow Exchange mechanical engineering index Moscow Exchange mechanical engineering index in dollars Metals and mining index Moscow Exchange metals and mining index Moscow Exchange metals and mining index in dollars MICEX index MICEX index - innovations MICEX index 10 MICEX index blue chips Index MICEX transport MICEX Index 10 Moscow Exchange Index Moscow Exchange Index 10 Moscow Exchange Blue Chip Index Moscow Exchange Government Bonds Index Moscow Exchange Government Bonds Index Moscow Exchange Innovations Index Moscow Exchange Corporate Bonds Index Moscow Exchange Corporate Bonds 3-5 Moscow Exchange Corporate Bonds Index MOEX 1 - 3 price Moscow Exchange Corporate Bonds Index MOEX 1-3 Moscow Exchange Corporate Bonds Index price Moscow Exchange Corporate Bonds Price Index 3-5 Moscow Exchange Metals and Mining Index Moscow Exchange Metals and Mining Index total return “gross” Moscow Exchange Metals and Mining Index total return “net” (at tax rates of foreign org- th) Moscow Exchange Metals and Mining Index of total return “net” (at Russian tax rates) Index of Moscow Exchange of municipal bonds Index of Moscow Exchange of municipal bonds price Index of Moscow Exchange Oil and Gas Index of Moscow Exchange Oil and Gas Index of total return “gross” Index of Moscow Exchange of Oil and gas full profitability “net” (at tax rates in.org) Moscow Exchange Oil and Gas Index full profitability “net” (at tax rates Russian org) Moscow Exchange index of consumption. sectors of total profitability “net” (at tax rates of the Russian org.) Moscow Exchange index will consume. total return sector “net” (according to foreign tax rates) Moscow Exchange Consumer Sector Index Moscow Exchange Consumer Sector Index Total Return “gross” Moscow Exchange Mid-Cap and Small Cap Total Return Index “gross” Moscow Exchange Mid-Cap Total Return Index “net” (at cash rates in.org) Moscow Exchange mid-capitalization index of total return "net" (at cash rates ros.org) Moscow Exchange Telecommunications Index Moscow Exchange Telecommunications Index total return "gross" Moscow Exchange Telecommunications Index total return "net" (according to tax rates of foreign org) Moscow Exchange Telecommunications Index of total return “net” (according to tax rates of Russian org) Index of Moscow Exchange of Transport Index of Moscow Exchange of Transport of total return “gross” Index of Moscow Exchange of Transport of total return “net” ( by tax rates in.org-th) Moscow Exchange Transport Index of total profitability “net” (by tax rates ros.org-th) Moscow Exchange Finance Index Moscow Exchange Finance Index of total profitability “gross” Moscow Exchange Finance Index of total profitability “net” (by tax rates in.org-th) Moscow Exchange Finance Index of total profitability “net” (at tax rates of Russian org-th) Index of Moscow Exchange of Chemistry and Petrochemistry Index of Moscow Exchange of Chemistry and Petrochemistry of total profitability “gross” Index of Moscow Exchange of Chemistry and Petrochemistry of total profitability “net” (according to foreign tax rates) Moscow Exchange Chemical and Petrochemical Index of total return “net” (according to Russian tax rates) Moscow Broad Market Index Moscow Exchange Electric Power Industry Index Moscow Exchange Electric Power Industry total return “gross” Moscow Exchange Electric Power Industry Index of total profitability "net" (at tax rates of foreign org.) Moscow Exchange Electric Power Industry Index of total profitability "net" (according to tax rates of Russian org.) Moon region index MOEX MBICP Moon region index MOEX MBITR Municipal index bonds Municipal bond index - total income Oil and gas index Moscow Exchange oil and gas index Moscow Exchange oil and gas index in dollars Consumer sector index Moscow Exchange consumer goods and retail index Moscow Exchange consumer goods and retail index in dollars RTS index RTS index second tier RTS mechanical engineering index RTS metals and mining index RTS oil and gas index RTS consumer index. sector index RTS consumer index RTS telecommunications index RTS transport index RTS finance index RTS chemicals and petrochemicals index RTS broad market index RTS electric power index telecommunications index Moscow Exchange telecommunications index Moscow Exchange telecommunications index in dollars Transport index Moscow Exchange transport index Moscow Exchange transport index in dollars Index finance Moscow Exchange finance index Moscow Exchange finance index in dollars Chemical and petrochemical index Moscow Exchange chemical and petrochemical index Moscow Exchange chemical and petrochemical index in dollars Moscow Exchange broad market index Moscow Exchange broad market index in dollars Electric power industry index Moscow Exchange electric power index Moscow Exchange electric power index Exchanges in dollars Indicator of the repo rate with the CCP of shares (calculation time 12:30) Indicator of the repo rate with the CCP of shares (calculation time 19:00) Indicator of the repo rate with the CCP of bonds (calculation time 12:30) Indicator of the repo rate with the CCP of bonds (time calculation 19:00) Repo rate indicator with bond CCP 1 week (calculation time 12:30) Repo rate indicator with bond CCP 1 week (calculation time 19:00) Repo rate indicator with bond CCP US dollars (calculation time 12:30) Repo rate indicator with CCP bonds US dollars (calculation time 19:00) MICEX base cap MICEX high cap MICEX innovations MICEX corp region MICEX corp region (val) MICEX corp region (val) 1-3 MICEX corp region (val) 3-5 MICEX corp. region (val) / MICEX corp. region (val.) / 3-5 MICEX corp. region (prices) MICEX corp. region (prices) 1-3 MICEX corp. region (prices) 3-5 MICEX corp. region (prices) / MICEX corp. region (prices) / 3-5 MICEX corp region 1-3 MICEX corp region 3-5 MICEX mechanical engineering MICEX metallurgy MICEX Muni region MICEX Muni region (val) MICEX Muni region (prices) MICEX oil and gas MICEX consumer sector MICEX REPO shares 1 day MICEX REPO shares 14 days MICEX REPO shares 7 days MICEX REPO region 1 day MICEX REPO region 14 days MICEX REPO region 7 days MICEX standard cap MICEX telecommunications MICEX transport MICEX finance MICEX chemistry and petrochemicals MICEX energy REPO with Central Committee shares REPO 1 day with the Central Committee shares 1 day EOD REPO with CCP bonds 1 day REPO with CCP bonds 1 day EOD Effective yield of the state region. MICEX
Everyone at least once in their life has come across the concept of stock indices or, at least, heard that “the RTS and MICEX indices have updated their maximum since April.” But what is hidden behind this concept, and why are stock indices needed at all? Today we will take a closer look at this issue.
What is an index
A stock index is an indicator of price changes for a certain group of securities. You can imagine a stock index as a “basket” of shares united according to some characteristic.The most important thing when studying an index is what stocks or bonds it is formed from. It is the set of securities included in the list on the basis of which the index is calculated that determines what information can be obtained by observing the dynamics of this index.
Why are indexes needed?
In general, the main purpose of compiling a stock index is to create an indicator with which investors could characterize the general direction and “speed” of movement of stock quotes of companies in a certain industry.Studying the dynamics of indices helps participants in exchange trading understand the impact of certain events on quotes - if, for example, an increase in oil prices occurs, then it is logical to expect an increase in the quotes of all oil companies. However, shares of different companies grow at different rates (and some may not grow at all) - the index helps to understand the general trend of a market segment without the need to assess the position of many disparate companies.
Comparing indices with each other gives an understanding of how different sectors of the economy are traded on the market in comparison with each other.
A little history
The first widely used index was the one created by Charles Dow in 1884. Its calculation was based on quotes from the 11 largest (and with the largest share turnover on the stock exchange) US transport companies at that time - the index was called the Dow Jones Transportation Average. In 1896, the index that is now known as the Dow Jones Industrial Average appeared, which united America's major industrial companies.
The word “industrial” in today’s realities is nothing more than a tribute to tradition, since the indicator itself has long included companies that are not directly related to this industry.
Index Manufacturers
Another way to classify indices is by compiler distribution. Indices can be “agency” when they are calculated by special agencies (for example, the S&P indices of the Standard & Poor’s agency). The second option is stock indices created, in fact, by stock exchanges. In the USA this is NASDAQ, and in Russia the two main stock indices were calculated by the MICEX and RTS exchanges, which have now merged into a single “Moscow Exchange”.
In addition, a brokerage company can also compile indexes. For example, ITinvest calculates its own indices, among which there are, for example, correlation indices (futures on the RTS index and the MICEX index, futures on the RTS index and the S&P 500 index), which are used for trading futures on the RTS index, “glued” futures and others indicators.
What do the indices show?
The list of stocks whose quotes are used to construct the index is formed according to certain criteria, depending on the purpose of compiling a specific index.The method of calculating indices implies the inclusion of financial instruments that have similar characteristics. In particular, the share capital of companies whose shares are included in the index should not differ by orders of magnitude.
In general, it is believed that the movement of stock prices of well-known and large companies also reflects the dynamics of trading in smaller financial instruments from the same industry (this is an important clarification). Industry stock indices are needed to create hypotheses about the dynamics of price movements of different companies in the same industry, even those not included in the index itself. Accordingly, industry indices help investors assess the prospects of investing in companies in a particular sector of the economy at a particular point in time.
Examples of industry indices can be well illustrated by the Dow Jones family, which includes:
- DJIA Industrial Index - is calculated based on the stock prices of the 30 largest companies from leading US industries.
- DJTA Transportation Index - covers shares of the 20 largest American transportation companies.
- Utility index DJUA - shares of 15 companies in the electricity and gas supply sector. engaged in gas and electricity supply.
There are also specialized exchanges for companies united on one or another basis. For example, the NASDAQ exchange of high-tech companies in the USA.
Often, indices are compiled on a regional basis - for example, you can compile lists of shares of companies representing a specific country or group of countries (for example, the European Union or blocs such as BRIC). Similar to industry indices, these indicators help investors better understand the state of affairs in the markets of specific regions and countries,
An example of a regional index is the Morgan Stanley Capital International family of indexes (famous among MSCI investors). MSCI country indices are calculated based on shares of companies in a specific country. There are also indices for individual markets - developed and emerging. For example, the MDCI Developed Market Index includes shares of companies from 24 countries in which stock markets are recognized as developed, and the MSCI Emerging Market Index, accordingly, includes shares of companies from 27 countries that are classified as developing.
Current events
At the end of last week, information appeared in many business media that the world's leading index providers are planning to exclude Russian companies from their own indices. In particular, as Vedomosti reported, one of the most famous index compilers, MSCI, announced the launch of a number of new indexes that do not include Russia. This was done in order to help investors avoid investing in a country that is under sanctions from the European Union and the United States.Another major provider, S&P Dow Jones, also announced that it is conducting consultations on the possible exclusion of Russian companies.
Experts interviewed by Vedomosti generally consider such a decision to be a blow for the Russian economy, since under the current conditions investors will not invest in domestic companies.
However, ITinvest chief economist Sergei Yegishyants is convinced that not everything is so scary:
There is only one meaning [of such sanctions] - a certain number of Western investment funds invest money not in some specially selected shares, but in some index, where the developers have driven companies based on a certain criterion (industry, geography, economic status, etc.) “Buying” such an index means, in essence, purchasing shares of all companies included in it in the proportion that is established for them by the index manufacturer. Accordingly, the exclusion of corporations from it means that now these “index” funds are no longer buying shares of these corporations, or even selling off those that they already owned.Those. for our stock market, this is simply another wave of flight of foreign money - and this time purely speculative (i.e. not participating in processes in the real economy): of course, this is unpleasant (the market is falling - although not much, because there is no such money here anymore so much) - but in principle it’s even good, since the less “hot” global money, the smaller the amplitude of market fluctuations during various shocks.
The economy does not suffer at all from such somersaults - in the sense, it is simply not affected by these inflows and outflows: they all pass by the real sector - and only the fall in the turnover of financial sector companies can somehow be considered a negative consequence for the national economy.
It’s just that in recent years, the share of this sector in the overall GDP growth has been very large - it is in the lead by a wide margin: another thing is that these are mainly not brokers, but banks, distributing an insane amount of consumer loans - although this process is already being phased out. In general, nothing bad happened.
How to use indexes
In general, the existence of an index serves several purposes. They can be used for:- Obtaining an idea of the general dynamics of stock prices of a certain group (companies, countries, industries, etc.). Often this data is used to make speculative transactions.
- There are derivative instruments that are based on the index itself - for example, there is a futures contract on the RTS index. Most often, such contracts are used to hedge risks (more details in our topic on futures).
- Obtaining information about changes in investor sentiment - if indices are rising, it means investors are positive about the prospects for investing in certain stocks.
- Monitoring indices over a long period of time allows you to get an idea of the investment climate in a particular country.
- Often, in addition to the index value itself, information is published on the total turnover of shares of the companies included in it. Changes in these figures make it possible to judge the general activity of traders in the market when dealing with securities of a certain type.
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