What is a Stock Market Index?

Stock market index is a kind of reference number compiled by a stock exchange or financial service institution to indicate changes in the stock market. Based on this, investors can test the effect of their own investment and use it to predict the movement of the stock market. At the same time, the press, company bosses, and even political leaders also use this as a reference indicator to observe and predict the social, political, and economic development situation. Because stock index calculations are complicated and there are many types, people often select several representative sample stocks from listed stocks and calculate the average price or index of these sample stocks. It is used to indicate the overall trend of stock prices and the rate of change in the entire market.

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· Dow Jones

Dow Jones Stock Index

The Dow Jones Stock Index is the oldest stock index in the world. Its full name is the average stock price. It was compiled in 1884 by Charles Dow, founder of the Dow Jones Company. The original Dow Jones Stock Price Average Index was based on the stocks of 11 representative railway companies and was calculated using the arithmetic average method. It was published in Charles Dow's own daily newsletter. Its calculation formula is:

The average number of stock prices = the sum of the prices of selected stocks / the number of selected stocks. Since 1897, the average Dow Jones stock price index has been divided into two categories: industrial and transportation. The average industrial stock price index includes 12 stocks, and the average transportation industry index includes 20 stocks. Published in the Wall Street Journal. In 1929, the Dow Jones Stock Price Average Index added public utility stocks to 65 stocks and has continued to this day.

The current average Dow Jones stock price index is based on October 1, 1928. Because the average Dow Jones stock price at the close of the day is exactly about $ 100, it is set as the base date. In the future, the calculated percentage of the stock price compared with the base period will become the voting price index for each period. Therefore, the current stock index generally uses points as the unit, and the rise and fall of each point of the stock index is relative to the change in the base date percentage.

The initial calculation method of the Dow Jones Stock Price Average Index was obtained by simple arithmetic mean method. When the ex-rights and dividends of stocks are encountered, the stock index will be discontinuous. After 1928, the average value of the Dow Jones stock price was changed to a new calculation method, that is, the connection technology was used to count stock ex-dividends or ex-dividends to ensure the continuity of the stock index, thereby perfecting the stock index and gradually Promote worldwide.

At present, the Dow Jones average stock price index is divided into four groups. The first group is the average industrial stock price index. It consists of the stocks of 30 representative large industrial and commercial companies, and it grows with the development of the economy. It can roughly reflect the price level of the entire industrial and commercial stocks in the United States. This is the average price of the Dow Jones Industrial Stock that is commonly cited . The second group is the average stock price index of the transportation industry.

It includes the stocks of 20 representative transport companies, namely 8 rail transport companies, 8 airlines and 4 road freight companies. The third group is the average index of utility stock prices, which is composed of the stocks of 15 gas companies and power companies representing U.S. utilities. The fourth group is the average price composite index.

It is a composite index derived from the average of 65 stocks in the first three groups of stock prices. Although this group of composite indexes provides direct stock market conditions for superior stocks, it is now commonly cited as the first group--industrial stock prices. Average index.

The Dow Jones Stock Price Average Index is currently the most influential and authoritative stock price index in the world. One of the reasons is that the stocks selected by the Dow Jones Stock Price Average Index are representative. The issue of these stocks The company is a well-known company with important influence in the industry. Its stock market has attracted the attention of the world stock market, and investors from all countries attach great importance to it. To maintain this feature, Dow Jones often adjusts the stocks it selects for its stock price average index, replacing those that have lost their representativeness with dynamic, more representative company stocks. Since 1928, 30 types of industrial and commercial company stocks, which are only used to calculate the Dow Jones Industrial Stock Price Index, have been replaced 30 times. Almost every two years, a new company's stock must replace the old company's stock. The second reason is that the Wall Street Journal, the news carrier that publishes the Dow Jones Stock Average, is the most influential newspaper in the world's financial community. The daily report details the average index of the sampled stocks, the percentage change rate, and the turnover of each sampled stock calculated every hour, and pays attention to the correction of the average stock price index after the stocks are divided into shares. During New York Stock Exchange business hours, the Dow Jones Stock Average Index is published every half an hour. The third reason is that this average stock price index has never been interrupted since it was compiled. It can be used to compare stock prices and economic development in different periods. It has become one of the most sensitive stock price average indexes reflecting changes in the US stock market. The main reference for market dynamics and equity investment. Of course, because the Dow Jones Stock Price Index is a component stock index, it includes only a very small portion of more than 2,500 listed companies, and most of them are hot stocks. Companies in the financial industry are included, so their representativeness has also been questioned and criticized.

· Stock Index Standards Poole

Standard & Poor's Stock Price Index

In addition to the Dow Jones Stock Price Index, the Standard & Poor's Stock Price Index is also very influential in the United States. It is the stock price index compiled by Standard & Poor's, the largest securities research institution in the United States. The company began compiling and publishing a stock price index in 1923. 230 stocks were initially selected and two stock price indices were compiled. By 1957, the range of this stock price index had been expanded to 500 stocks, divided into 95 combinations. The four most important combinations are the industrial stock group, the railway stock group, the utility stock group, and the 500 stock mix group. Since July 1, 1976, it has been changed to 400 industrial stocks, 20 transportation stocks, 40 utility stocks, and 40 financial stocks. For decades, although there have been stock changes, it has remained at 500. The Standard & Poor's stock price index uses the average market price of sampled stocks from 1941 to 1943 as the base period, the number of listed stocks as the weight, and the weighted calculation based on the base period, with a base point of 10. Multiply the current stock market price by the number of shares issued on the stock market as the numerator, multiply the stock market price in the base period by the number of stocks in the base period as the denominator, and divide the number by 10 to obtain the stock price index.

Stock Market Index New York Stock Exchange

New York Stock Exchange Stock Price Index

New York Stock Exchange stock price index. This is a stock price index compiled by the New York Stock Exchange. It started in June 1966, first as a common stock price index, and later as a mixed index, and includes 1,570 stocks of 1,500 companies listed on the New York Stock Exchange. The specific calculation method is to sort these stocks according to their price, and calculate the price index of industrial stocks, financial stocks, utility stocks, and transportation stocks. The largest and most extensive is the industrial stock price index, which consists of 1093 stocks. The financial industry stock price index includes 223 stocks of investment companies, savings and loan associations, installment financing companies, commercial banks, insurance companies, and real estate companies; the transportation industry stock price index includes 65 stocks of companies such as railways, airlines, ships, and automobiles ; The stock price index of public utilities includes 189 stocks of telephone and telegraph companies, gas companies, power companies and post and telecommunications companies.

The New York Stock Price Index is based on 50 points determined on December 31, 1965, and uses a composite index. The New York Stock Exchange announces changes in the index every half an hour. Although the New York Stock Exchange has not compiled a stock price index for a long time, it is more popular with investors because it can comprehensively and timely reflect the comprehensive status of its stock market activities.

· Stock Market Index Nikkei Dow Jones

Nikkei Dow Jones Stock Price Index (Nikkei Average Share Price)

The average number of stock prices compiled and published by the Nihon Keizai Shimbun reflecting changes in the Japanese stock market price. The index has been compiled since September 1950.

The revised average stock price was initially calculated based on the stocks of 225 companies listed on the first market of the Tokyo Stock Exchange. On May 1, 1975, the Nihon Keizai Shimbun bought a trademark from Dow Jones Company and calculated it using the revised method of Dow Jones Company of the United States. This stock index was renamed "Nikkei Dow Jones Average Stock Price". On May 1, 1985, when the contract expired for 10 years, after two discussions, the name was changed to "Nikkei Average Stock Price".

According to the number of sampling objects, the index is divided into two types, one is the Nikkei 225 average stock price. The selected samples are all stocks listed on the first market of the Tokyo Stock Exchange. In principle, the selected samples will not be changed. In 1981, 150 manufacturing industries were established, 10 in the construction industry, 3 in the aquaculture industry, 3 in the mining industry, 12 in commerce, 14 in road transportation and shipping, 15 in finance and insurance, 3 in the real estate industry, warehouses, electricity and gas. 4 companies and 5 service companies. Since the Nikkei's 225 kinds of average stock prices have continued since 1950, their continuity and comparability are good, and they have become the most commonly used and reliable indicators for examining and analyzing the long-term evolution and dynamics of the Japanese stock market. The other is the Nikkei 500 average stock price. It was compiled from January 4, 1982. Because its sample includes 500 stocks, its representativeness is relatively broader, but its sample is not fixed. In April each year, it must be based on factors such as the operating conditions of listed companies, transaction volume and transaction value, and total market value. The sample is replaced.

Stock market index "Financial Times"

Financial Times Stock Price Index

The full name of the "Financial Times" stock price index is "London" Financial Times "industrial and commercial common stock price index", published by the British "Financial Times". The stock price index includes a representative list of 30 publicly listed common stocks selected in the British industry and commerce. It uses July 1, 1935 as the base period and its base point is 100 points. The stock price index is world-renowned for its ability to provide timely information on the London stock market.

Hong Kong Hang Seng Index

The Hong Kong Hang Seng Index is the oldest and most influential stock price index in the Hong Kong stock market. It was published by the Hong Kong Hang Seng Bank on November 24, 1969.

The Hang Seng Stock Price Index includes 33 representative and economically powerful large company stocks selected from more than 500 listed companies in Hong Kong as constituent stocks, divided into four categories-4 financial industry stocks, 6 public utilities Stocks, 9 real estate stocks and 14 other industrial and commercial (including aviation and hotel) stocks.

These stocks account for 63.8% of the market value of Hong Kong stocks, as the stock index involves various industries in Hong Kong and is highly representative.

The compilation of the Hang Seng Stock Price Index is based on July 31, 1964. Because the Hong Kong stock market is operating normally on this day, the transaction value is uniform, which can reflect the basic situation of the entire Hong Kong stock market. The base point is determined to be 100 points. The calculation method is to calculate the market value of the 33 stocks at the daily closing price multiplied by the number of shares issued, and then compare it with the market value of the base period and multiply by 100 to obtain the stock price index for that day.

As the selected base period for the Hang Seng Stock Price Index is appropriate, no matter whether the stock market has skyrocketed or plummeted or is at a normal trading level, the Hang Seng Stock Price Index can basically reflect the activity of the entire stock market.

Since the Hang Seng Stock Price Index was published in 1969, it has been adjusted many times. As the Hong Kong authorities passed legislation in August 1980, the Hong Kong Stock Exchange, Far East Exchange, Gold and Silver Stock Exchange and Kowloon Stock Exchange were merged into the Hong Kong Stock Exchange. In the current Hong Kong stock market, only the Hang Seng Stock Price Index Coexisting with the newly generated Hong Kong index, other stock price indexes in Hong Kong no longer exist.