Exchanges are very important when involved in the financial market such as in the Crypto and stocks markets. In the stock/equity market, there are 60 major global stock exchanges that range in size and trading volume.
In this post, we’ll see the top 5 stock exchanges based on their market capitalization. Let’s get right into it easy peasy!
What is a Stock Exchange?
A stock exchange is a marketplace for the buying and selling of shares, bonds and securities. Stock exchanges can serve as a measure for the health of the national economy, and can also be a key indicator of world economic strength. This is because the growth of the financial market equates to higher standards of living and employment rates.
Traditionally, stock exchanges were physical buildings in each country of operation, but with the shift toward electronic trading many have closed their trading floors and switched to online platforms. However, the institutions themselves are still around, and some of them are bigger than ever with market capitalizations of trillions of dollars.
Top 5 Stock Exchanges in the world.
1. New York Stock Exchange
The New York Stock Exchange (NYSE) is located on Wall Street in New York. It was founded in 1817, but it didn’t operate under the NYSE name until 1963. The New York Stock Exchange Group had a turbulent road to its top spot, with infamous events such as the Wall Street Crash in 1929 and Black Tuesday in 1987.
It has remained the largest stock exchange in the world by market capitalisation ever since the end of World War I, when it overtook the London Stock Exchange. In 2012, the NYSE was taken over by an American futures exchange group, Intercontinental Exchange.
The New York Stock Exchange’s market capitalisation was $23.12 trillion in March 2018 – this is nearly 40% of the total world stock market value. There are over 2400 companies listed on the New York Stock Exchange, which span sectors such as finance, healthcare, consumer goods and energy. Some of its more famous companies include Exxon Mobil Corp (XOM), Citigroup Inc (C) and Pfizer Inc (GE) – the Dow Jones is the most used index for tracking the value of the NYSE, but components can also be listed on the NASDAQ.
2. NASDAQ
The NASDAQ stock exchange is also in New York, located in the famous Times Square. It stands for National Association of Securities Dealers Automated Quotations and was founded by a group of local stockbrokers in 1971.
The NASDAQ is unusual in that it never operated on an open outcry system; instead it has always used a computer and telephone-based system of trading, which made it the first electronic stock exchange.
The NASDAQ market capitalisation reached $10.93 trillion in March 2018, which places it as the second largest stock exchange. However, it has the largest market capitalisation of technology stocks – some of the NASDAQ’s top listed companies include Apple (APPL), Microsoft (MSFT), Facebook (FB) and Tesla (TSLA). The index used to measure the performance of the exchange is the Nasdaq 100.
3. Tokyo Stock Exchange
The Tokyo Stock Exchange (TSE) was founded in 1878 and is the largest stock exchange in Japan. The TSE did face problems post World War II – and was even suspended between August 1945 and April 1949 – due to the country’s involvement in the war.
It was rebranded in 1949, and is now commonly known under the name of its owner: Japan Exchange Group. The group was formed in the merger between the Osaka Securities Stock Exchange and the TSE in 2013. The Tokyo Stock Exchange now partners with other exchanges all over the world, including the London Stock Exchange.
Today, there are over 3575 companies listed on the Tokyo Stock Exchange, which has taken the TSE’s market capitalisation to $6.22 trillion as of March 2018. The Tokyo Stock Exchange’s benchmark index is the Nikkei 225, which includes the top companies listed on the TSE such as Honda Motor Co, Toyota Motor Corp and Sony Corp.
4. Shanghai Stock Exchange
The Shanghai Stock Exchange (SSE) is one of three independent stock exchanges in the People’s Republic of China – the other two being Shenzhen and Hong Kong, which also feature on this list. The Shanghai Stock Exchange is the fourth largest stock exchange in the world, despite the fact it was only founded in 1990. The exchange’s origins do actually date back to 1866, but it was suspended in 1949 due to the Chinese revolution.
Each stock listed on the SSE has ‘A’ shares that are priced in the local yuan currency, and ‘B’ shares that are quoted in US dollars. ‘A’ shares are for domestic investment only, with the exception of investors who qualify for the foreign investment scheme, while ‘B’ shares are available to both domestic and foreign investors.
The Shanghai Stock Exchange’s market capitalization reached $5.01 trillion in March 2018. Traders can track the performance of stocks listed on the Shanghai Stock Exchange using the SSE Composite index, also known as the Shanghai Composite. This includes the largest stocks on the Shanghai Stock Exchange, such as PetroChina, the Industrial and Commercial Bank of China and the Agricultural Bank of China.
5. Hong Kong Stock Exchange
The Hong Kong Stock Exchange (SEHK) was founded in 1891 by the Association of Stockbrokers in Hong Kong – it was renamed the Hong Kong Stock Exchange in 1914. The SEHK is one of the three stock exchanges in China, but the physical trading floor of the SEHL was closed in 2017 because of the shift toward electronic trading.
The Stock Exchange of Hong Kong is the third-largest stock exchange in Asia, and the fifth largest in the world with a market capitalisation of $4.46 trillion in March 2018. The Hong Kong Stock Exchange trades in Hong Kong Dollars (HKD), as the companies listed are primarily based in Hong Kong.
There are 1955 companies listed on the Hong Kong Stock Exchange – a large portion of the Hong Kong Stock Exchange’s market capitalization comes from its 20 largest stocks, which include AIA, Tencent Holdings and HSBC Holdings.
Other top Stock exchanges in the world include the London Stock Exchange (LSE), Euronext Stock Exchange, Shenzhen Stock Exchange, Toronto Stock Exchange, and Frankfurt Stock Exchange.
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