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International Stock Markets at a Glance

Stock markets or equity markets are public entities where people could trade the shares of a company stock or derivates at mutually agreed prices. Every country has its own stock exchange, where the stocks of the companies in that country, as well stocks of several companies from other countries could be available for trading. Further, each country could have more than one stock exchange. The function of stock exchanges is to bring buyers and sellers of stocks of entities listed in the exchanges together, so that they could freely trade on the stocks or securities when the exchanges are open for trading.

Global Stock Markets

One set of statistics reveal that Asia has 37 countries with stock exchanges, Africa possesses 23 countries with stock exchanges, Europe has 46 countries with stock exchanges, North America has 18 countries with stock exchanges, and South America has 12 countries with stock exchanges. In total, there are 136 countries having their own stock exchanges. Further, data show that there are 8 countries in the world without any stock exchange of their own. They are Andorra, Antigua and Barbuda (which uses the service of Eastern Caribbean Securities Exchange), Brunei, Chad, Comoros, Marshall Island, Nauru, and North Korea.

Stock Markets around the World

The opening and closing time of each stock exchange is different, as is the total trading period. Since each country has its own time zone, at least some stock exchanges are open and available for trading throughout the day, except for a few hours. In fact, the only gap in trading hours in international stock markets is between the closing of the stock exchanges in the Americas and the opening of the stock exchange in New Zealand. The leading stock exchanges of the world by market capitalization are as follows.

  1. New York Stock Exchange Euronext – Market Capitalization $14,085 billion
  2. NASDAQ OMX Group – Market Capitalization $4,582 billion
  3. Tokyo Stock Exchange – Market Capitalization $3,478 billion
  4. London Stock Exchange – Market Capitalization $3,396 billion
  5. Hong Kong Stock Exchange – Market Capitalization $2,831 billion
  6. Shanghai Stock Exchange – Market Capitalization $2.547 billion
  7. TMX Group – Canada – Market Capitalization $2,058 billion
  8. Deutsche Borse – Market Capitalization $1,486 billion
  9. Australian Securities Exchange – Market Capitalization $1,386 billion
  10. Bombay Stock Exchange – Market Capitalization $1,263 billion
  11. National Stock Exchange of India – Market Capitalization $1,234 billion
  12. SIX Swiss Exchange – Market Capitalization $1,233 billion
  13. BM&F Bovespa – Market Capitalization $1,227 billion
  14. Korea Exchange – Market Capitalization $1,179 billion
  15. Shenzhen Stock Exchange – Market Capitalization $1,150 billion
  16. BME Spanish Exchanges – Market Capitalization $995 billion
  17. JSE Limited – Market Capitalization $903 billion
  18. Moscow Exchange – Market Capitalization $825 billion
  19. Singapore Exchange – Market Capitalization $765 billion
  20. Taiwan Stock Exchange – Market Capitalization $735 billion

Stock Market Quotes

The major market participants in any stock exchange are individual retail investors and institutional investors like banks, mutual funds, hedge funds, and insurance companies. However, several other market participants, such as index funds, exchange-traded funds (ETFs), pension funds, and organized investor groups have also become quite active in international stock markets. On many occasions, the publicly traded corporations also trade in shares, either their own or that of other corporations. All these market participants buy and sell stocks on stock market quotes. These stock market quotes continuously vary for most stocks throughout the day but some stocks could go on for even long periods without witnessing any trading.

World Stock Markets Live

The stock market quotes are based on trends, with the upward trends considered as positive are known as bull market trends, while the downward trends considered as negative are bear market trends. Bull markets are the result of extreme optimism and bear markets are led by excessive pessimism. A market behavior theory, termed as efficient market hypothesis (EMH), prevailed for a few decades. This theory stated that the fundamental factors such as outlook for profits, margins, dividends, change in management, interest rates, inflation, unemployment data, etc., should affect stock market quotes and markets always remain efficient. However, the global stock markets have proved time and again that this type of theory is not valid in actual market operating conditions.

World Stock Market Charts

The constant and totally irrational behavior of world stock market charts has led economists, financial experts, and market analysts to conclude that the stock market behavior is based more on psychological factors than on any other economic or financial factors. People try to perceive patterns in world stock market charts but what they actually see is not any specific pattern but just noise. The trading in stocks is also affected by such psychological factors like group thinking, herd mentality, gambling tendency, and total irrationality, etc. Group thinking is quite simple. If you see two restaurants side by side, with one nearly empty, while the other one is virtually fully occupied, which one would you like to enter? You would naturally be reluctant to enter the empty restaurant. The same way, people buy stocks that others are buying and ignore the ones that very few buy, though they might prove to be more profitable than the most popular ones.

The herd mentality is even stronger in global stock markets. When everyone is buying and the markets are going up, you think that so many people should be right and you just follow them and start buying. The reverse is equally true and pronouncedly much more effective. When everyone is selling and the markets are going for a free-fall, you also sell, gripped mostly by fear or a panic mentality. This herd mentality has been the ruin of most investors in the international stock markets, with people just going by the movements of the world stock market charts without any specific individual analysis. However, prudent investors usually buy when the markets fall and sell when the markets go up. The basic and fundamental principle of stock market trading is buy low and sell high, which gets ignored mostly due to the herd mentality.

The third factor that influences many investors is the lack of understanding the basic principles of gambling. The market behaves like a roulette game in a casino when the market is normal, where the possibilities are somewhat known and the price movements are independent of investment decisions of the various players in the market. However, when there is a stress in the markets, either as a strong rise or as a sharp fall, the trading becomes equal to a poker game, where investors try to judge others and take decisions. However, trying to judge the decisions of thousands or millions of investors in a stressed market is next to impossible and most people end up with wrong decisions, like losers in poker games.

The final factor that actually moves most markets is complete irrational behavior by the investors. When any specific news comes into the market, whether it is economic news or financial news, the market reaction is not always rational, even though that news might not have any serious implication on the fundamental value of a single security or all the securities listed in the stock exchange. This irrational behavior is even more prominent, because the markets anticipate most of the news and usually discount the effect of such news but even minor variations from the expectations result in violent market movements. The main reasons for such irrational behavior are rumors, wrong or over media reaction, over enthusiasm, or mass panic. Fortunately, such irrational behaviors do not last too long, since the professional investors like hedge funds take advantage of such hysterical reactions and bring some amount of stability to the markets, restoring a fair amount of sanity.

Live Stock Markets

Live stock markets drive the economy of a country. Companies rely on the stock markets as the major source of raising the amount they require for capital expenditure and operating expenditure. A company unlisted in any stock exchange begins the process of initial public offer (IPO) of its shares to the general public and institutional investors to raise funds in a big way to start or expand its operations. Offering shares to the public benefits a business organization in two ways. The first is that the amount accrued through public offering of the shares is the cheapest way of financing, since the issue of dividends to the shareholders is at the sole discretion of the company. If it does not issue dividends, then the cost of raising the capital costs the company nothing. Even if the company issues dividends, the amount issued is always much less than any interest that the company would be liable to pay if it borrows the same amount from lenders such as banks or other financial institutions. The second benefit is that the company need not repay the amount raised through public offering, whereas any amounts borrowed from lenders has to be paid back with interest within a stipulated period. These are the reasons why many companies even come up with follow-up public offerings by issuing more stocks.

The live stock market also offers investors a very good opportunity to invest their funds in a highly liquid avenue. The liquidity in global stock markets allows them to sell the securities easily and quickly and convert them to cash, compared to many other investments that are less liquid. Further, the live stock market is a very good indication of the state of the economy of the company. The stock markets move up vigorously if the economy is strong and on a growth path. If the economy is weak, the markets also decline substantially. Further, the increase in share prices indicates higher business activities and growth in revenues. The fall in stock prices is a symbol of poor business performance and lower revenues. These live stock market movements also help central banks and governments to decide their fiscal policies, such as interest rates, tax rates, etc. Financial stability in the world stock markets is necessary for global economic stability.

U.S. Stock Markets

Even though the world stock markets function all over the earth, the U.S. stock markets are the parameter by which other stock markets move. The U.S. stock markets have slowly and steadily improved after the bleak period in early 2009. The closely watched Dow Jones Industrial Average reached 14,164.53 in May 2013, its all-time high since October 9, 2007. Another crucial index, the S&P 500, which is a broad measurement of U.S. equities, is also very near the previous all time high of 1,565.15 reached on October 9, 2007. The S&P 500 has gained 14.4% in 2013. This clearly shows that the U.S. economy is also gaining strength after the huge financial and economic crisis of 2008, though at a very slow pace. The increase in the U.S. markets is reflecting in other world stock markets and many of them have regained the losses suffered during late 2008 and early 2009.

European Stock Markets

The European stock markets have also been improving over the last few years, even though the recovery has been very slow. However, the benchmark Stoxx Europe 600 index has gained 28% in the last 12 months, mainly due to aggressive stimulus measures by the European central banks. The overall gain by the European stock markets has been 9.0% in 2013. Still, the performance of the European stock markets in the past few weeks have been without much direction, due to concerns that the U.S. Federal Reserve would begin a quantitative easing policy through reduction of its large scale program of bond buying. The European stocks recovered marginally on June 4, 2013 from one-month lows. Still, the lack of economic growth in most European countries, with many of them reporting high unemployment rates such as France, Spain, and Greece have been hindering any strong recovery in the European stock markets.

Asian Stock Markets

Asian stock markets have been moving up and down in the last few years. In the middle of May, the main index of the Tokyo Stock Exchange, the Nikkei 225 index climbed to a peak in a period of the last 5½ years but lost 15% after that. The index has gained 53% in 2013. Most of the other major Asian stock markets have also been gaining but the growth has been widely varying. Growth of Indian stock market in 2013 has been just 0.6%, while China has climbed 3.5%. South Korea has declined 0.9% but Singapore and Taiwan grew 3.9% and 6.0% respectively in 2013. Australia rose 4.8%, while the overall growth of Japanese stock market has been 29.5% in 2013.

International Stock Markets Live

Overall, the global stock markets have gone up by 13.0% in 2013, indicating that the performance of world stock markets has not been stagnating. Still, lots of uncertainties remain about the economic growth in the U.S., Europe, and many Asian countries and it is difficult to forecast the trend of international stock markets in the near future.

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