Basic information on Indices

I decided to do a post on the general information on some of the world’s global indices as I have recently completed a futures trading course, and it has piqued my  interest in futures trading, and I might decide to go down this path in the near future. Thus, I think it necessary to start compiling some information on indices as this is a potential type of futures to trade. I will try to include some general information about them, the way they are computed, the composite of them and hopefully any further useful information. I might be wrong, so please don’t take my word for it, and the post is mainly for my own benefit and ease of use.

ASX 200

It is recognized as the benchmark index in Australia, and it covers approximately 80% of Australian equity market capitalization. It is reviewed quarterly. It is weighted by float-adjusted market cap, which means its components are weighted by the market value of the outstanding shares held by public. Index calculation is the quotient of total available market capitalization of the constituents and its divisor. The weight of the top 10 constituents is approximately 48.7%. The ASX 200 is made up of mainly financials ~ 38.8% and materials ~ 15.7%.

Nikkei 225

It tracks the performance of the top rated 225 companies listed in the First Section of the Tokyo Stock Exchange. It is reviewed once yearly by the liquidity in the market and sector balance. It is a price weighted index, which means that price movements of highly priced stock will have significant influence on the index value.

Adjusted stock price = stock price x 50(yen) / presumed par value (yen)

Nikkei Stock Average = sum of Adjusted stock price / Divisor

The index is mainly made up of companies from technology ~ 43.51% and consumer goods ~ 22.56%.

Base on personal experience, the companies in the index are export oriented and the value of the Nikkei 225 is inversely related to the strength of the yen.

HSI

It tracks 50 of the largest and most liquid companies of the Hong Kong stock market. It is weighted by float-adjusted market cap, which means its components are weighted by the market value of the outstanding shares held by public, and also has a 10% on individual securities. It is reviewed quarterly. The index is mainly made up of financials ~ 47.57% and Information technology ~ 11.48%.

DAX

It is a blue chip stock market index tracking 30 of German’s top companies based on book volume and market capitalization. It is free float capitalization weighted, calculated as both price and total return index and has a cap of 10% on individual securities. It is reviewed on a quarterly basis. It is diversified of some sorts, with chemical companies at ~ 20.2%, automobile ~ 14.7% and others ~ 21.9%.

FTSE 100

It is a share index of 100 companies listed on the London stock exchange with the largest capitalization. It is capitalization weighted and reviewed quarterly. It appears to be well diversified with Oil & Gas ~ 11.92%, Personal & Household Goods ~ 11.77%, banks ~ 10.80% and Healthcare ~ 9.52%. It consists mainly of internationally focused companies as seen from its reaction to sterling rates, and is not a good indicator of UK economy.

S&P 500

It measures 500 large companies listed on the NYSE or NASDAQ. It is free float capitalization weighted. It is made up of approximately IT ~ 20.29%, Financials ~ 14.47%, 13.32%, Consumer Discretionary ~ 11.76% and Industrials ~10%.

DJIA

It measures 30 companies listed in USA, and is price- weighted. Its top sectors are industrials ~ 19.69%, financials ~ 18.09%, IT ~ 16.92% and Consumer Discretionary ~ 14.23%.

NASDAQ Composite

It measures all NASDAQ domestic and international based common type stocks listed on the Nasdaq stock exchange. It is market capitalization weighted. It consists of over 3000 companies and is heavily skewed towards Technology firms at 41.52%.

Further links for more information

https://www.msci.com/documents/1296102/1339060/GICSSectorDefinitions.pdf/fd3a7bc2-c733-4308-8b27-9880dd0a766f

 

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