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Which are the most important stock markets in the world?

Dec 27, 2019 | 2 months ago | Read Time: 3 minutes | By iKnowledge Team
Which are the most important stock markets in the world?

The stock market gives companies the opportunity to raise capital by offering corporate bonds or shares of stock and provides transparency for all the investors. The facility where these stocks or bonds can be bought, usually through traders or brokers, is known as a stock exchange.

The stock market dilemma: Where to invest money

One of the biggest question’s prospective investors face, is whether to invest in individual stocks, or to go for stock mutual funds. By investing money in stock mutual funds, one can buy small shares of different stocks, thus lessening the risk. Buying individual stock comes with a greater risk, but also potentially greater rewards if that stock rises, thus making it one of the more attractive types of investment in the stock market.

Most important stock markets in the world

1. New York Stock Exchange: The New York Stock Exchange is the largest stock market in the world, whose market capitalization totaled $23.12 trillion in March 2018. The NYSE is the most important equity market today and has a market cap to GDP ratio of 138.26% [3]. The market capitalization to GDP ratio, when compared to the historic ratio, serves as an indicator of whether the market is undervalued or overvalued.

2. NASDAQ Stock Exchange: The National Association of Securities Dealers Automated Quotations (NASDAQ) is the second largest stock market in the world, whose market capitalization was $10.93 trillion in March 2018. Owned by NASDAQ, Inc, NASDAQ Stock Exchange was the first exchange to use electronic system in trading, and has a market cap to GDP ratio of 65.37% [5]

3. Japan Exchange Group: The Japan Exchange Group is the third largest stock market in the world, with its market capitalization being $6.22 trillion as of March 2018. The Tokyo Stock Exchange and the Osaka Securities Stock Exchange merged in 2012 to form the Japan Exchange Group, and it has a market cap to GDP ratio of 124.22% [6]

4. Shanghai Stock Exchange: The Shanghai Stock Exchange ranks fourth in the list of leading stock markets in the world and has a market capitalization of $5.01 trillion as of March 2018. The Shanghai Stock Exchange is one of the three independently operated stock markets in China and has a market cap to GDP ratio of 53.65% [7]. The Shanghai Stock Exchange, between 2013 and 2015 appreciated 250%, and is thus still considered to be an immature market.

5. Hong Kong Stock Exchange: The Hong Kong Stock Exchange, owned by Hong Kong Exchanges and Clearing, has a market capitalization of $4.46 trillion, and is the fifth largest stock market in the world. With a GDP of $272.1 billion, the Hong Kong Stock Exchange has a market cap to GDP ratio of 1639.84% [8]

6. London Stock Exchange: The London Stock Exchange is the oldest stock market in the world. Founded in 1801, the London Stock Exchange Group has a market capitalization of $4.38 trillion as of March 2018, and a market cap to GDP ratio of 175.93% [9]

7. Euronext Amsterdam Stock Exchange: With a market capitalization of $4.36 trillion as of March 2018, the Euronext Stock Exchange has a market cap to GDP ratio of 603.32% [10]. It is also the largest stock exchange in the Eurozone.

Investing in individual stocks or stock mutual funds will have their advantages and disadvantages, while factoring in the market volatility. However, there are other ways in which individuals can invest for the future.

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Citations:

[1] https://www.wise-owl.com/stock-analysis/asian-stock-markets-2016-how-does-the-asx-compare-to-the-japanese-or-chinese-stock-market

[2] https://visual.ly/community/infographic/economy/world%E2%80%99s-largest-stock-exchanges

[3] https://www.stockmarketclock.com/exchanges/nyse

[4] https://www.businessinsider.in/The-NYSE-Makes-Stock-Exchanges-Around-The-World-Look-Tiny/articleshow/45195159.cms

[5] https://www.stockmarketclock.com/exchanges/nasdaq

[6] https://www.stockmarketclock.com/exchanges/jpx

[7] https://www.stockmarketclock.com/exchanges/sse

[8] https://www.stockmarketclock.com/exchanges/hkex

[9] https://www.stockmarketclock.com/exchanges/lse

[10] https://www.stockmarketclock.com/exchanges/euronext


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