Equity Market Overview, History, Importance, Top Equity Exchanges

There are many other types of specialized stock market indexes for certain demographics. For example, the Dow Jones Islamic Market World and S&P 500 Shariah indexes are geared toward investors adhering to Islamic laws, while other indexes cater toward goals like Environmental-Social-Government (or ESG) investments. The Dow Jones is the most famous stock market index and was founded in New York on May 26, 1896 by Charles Henry Dow, editor of The Wall Street Journal, which was the creator of many other indexes over the years.

As mentioned, equity markets are the hub that connects buyers and sellers of equities. Equity securities are initially listed on the markets through an initial public offering (IPO) and are subsequently traded among people on the secondary market. Nicknamed “The Big Board”, it has remained the largest stock market in the world since the end of World War I, when it surpassed the London Stock Exchange. The NYSE is headquartered at 11 Wall Street in Manhattan, and its building was recognized as a national landmark in 1978.

Largest Stock Exchanges in the World

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We used data from the World Federation of Exchanges to sift out the biggest exchanges in the world. Since several exchanges are also publicly listed stocks themselves, the market capitalization used is for all the companies listed on the exchanges instead of the value of the exchange’s own publicly traded stock. Additionally, while the Bombay Stock Exchange is one of the largest exchanges in India, no reliable data for its market value is available so it has been omitted.

• High demand and increased buying activity for stocks cause prices to rise, while low demand and increased selling activity for stocks cause prices to decline.
• It’s worth noting that global stock market indexes weighted by market capitalization don’t offer exposure to emerging markets or frontier markets, since they’re too small for inclusion.
• At the high end of the spectrum is the mighty NYSE, representing $18.5 trillion in market capitalization, or about 27% of the total market for global equities.
• When a buyer will pay any price for the stock, they are buying at market value; similarly, when a seller will take any price for the stock, they are selling at market value.
• BSE located at Dalal Street, Mumbai has more than 5500 listed on its platform.

The oldest and first stock exchange was established more than 400 years ago in Europe, Netherlands. Stock Exchanges give membership to designated stockbrokers and members who act as intermediaries for buying and selling securities. Stock exchange ensures compliance of fair trade policies and compliance related to transaction activities themselves. Stock exchanges have different indices which act as a barometer of the health of the economy.

In the beginning, 12 companies traded on the Dow Jones, while today, 30 form part of it, of which only General Electric has remained since the beginning. The first Dow Jones index obtained a value of 40.94 points, and today, its listing stands around 25,000 points. The world’s stock market exchanges have a combined market cap of $89.5 trillion.

Historical development of world market cap

This form of trading has become rare and replaced by electronic communication. National Stock Exchange is the world’s largest derivatives exchange in 2021 as per the number of contracts traded according to the Futures Industry Association (FIA), a derivatives what is investment activities trade body. NYSE offers trading in various financial instruments like exchange-traded funds (ETFs), Equities, Bonds, and several other options. A stock exchange’s primary responsibility is to ensure there is adequate liquidity in the market.

Shenzhen is the second stock exchange in China along with Shanghai Stock Exchange which was established on December 1, 1990. In the year 2017, HKSE transitioned from the physical trading process into electronic trading. Many big business conglomerates like HSBC Holdings, AIA, Tencent Holdings, China Mobile, etc. are listed on HKSE. International plc acted as sole financial advisor to H2 Green Steel in the private placement. The proceeds will finance the construction and development of H2 Green Steel’s flagship large-scale green steel plant in Boden, Sweden. Groundworks have been ongoing on the site in Boden since summer 2022, and through this transaction H2 Green Steel takes another big leap towards start of operations end of 2025.

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Despite the damages from the projectile, stock trading remained partially active in the basement. In 1914, and as a result of the start of World War I, the stock market suffered its first major closure in its history, and remained closed for four months and two weeks. When it reopened on December 12, it suffered the largest one-day percentage drop, when the Dow Jones index lost 24.4%. The history of the stock market dates back over 500 years since its journey began in 1460 in Antwerp. The New York Stock Exchange (NYSE) on Wall Street is a famous example of a physical stock exchange; however, there is also the option to trade in online exchanges from that location, so it is technically a hybrid market.

This primer – one in the Primer Series by SIFMA Insights – is a thorough comparison of equity markets across the globe, analyzing data on market size, formation, performance and costs, as well as markets in indexes. Companies list their stocks on an exchange as a way to obtain capital to grow their business. An equity market is a form of equity financing, in which a company gives up a certain percentage of ownership in exchange for capital. Equity financing is the opposite of debt financing, which utilizes loans and other forms of borrowing to obtain capital. There are approximately 3000 companies listed under the London Stock Exchange with a combined market capitalization of more than 4.05 trillion dollars. Tokyo Stock Exchange which is also known as Tosho is the fifth largest stock exchange in the world located in Tokyo, Japan.

Regional Stock Market Indexes

Additionally, the LSE is one of the most unique exchanges in the world, where shares are traded in the Great British Pence instead of the Pound. Every day, the stock market attracts countless investors who are either looking to make a buck, earn dividends, or buy the shares of their preferred companies to have a stake in them. The market is also known for offering great returns to lucky and astute investors, but by its very nature, is also risky since its fortunes rise and fall with that of the economy and the companies themselves.

There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising. When a company offers its stock on the market, it means the company is publicly traded, and each stock represents a piece of ownership. This appeals to investors, and when a company does well, its investors are rewarded as the value of their stocks rise. Shanghai Stock Exchange is the third-largest in the world and the biggest stock exchange in Asia, located in Shanghai, China. It was founded in the year 1866 however it was adjourned in 1949 due to the Chinese revolution and its modern foundations were laid in 1990.

Even added together, these three exchanges make up just 0.01% of total market capitalization. Some of the largest equity markets, or stock markets, in the world are the New York Stock Exchange, Nasdaq, Tokyo Stock Exchange, Shanghai Stock Exchange, and Euronext Europe. When companies are born they are private companies, and after a certain time, they go through an initial public offering (IPO), which is a process that turns them into public companies traded on a stock exchange.

For starters, non trading operations such as money transfers and account deposits still require manual operations. The equity market is also referred to as the stock market and is one of the most important leading indicators of the market economy. It also plays a pivotal role in supporting a market-based economy since it is the bridge between providing capital to companies who require it and providing investments for investors who are seeking a return on their investment.

Euronext, considered to be the best stock exchange in Europe is the fourth largest stock exchange in the world which is located in Amsterdam, Netherlands. NYSE is the biggest stock exchange in the world which is located at 11, Wall Street, New York City, USA. NYSE has 2400 listed companies which https://1investing.in/ include many blue-chip companies like Walmart, Berkshire Hathaway Inc, J.P. Morgan Chase, etc. Before getting into the main topic of knowing the most important and the largest stock markets in the world, let us first understand what is a stock market, more popularly known as Stock Exchange.

Equity markets are powerful pricing mechanisms since they reflect the immediate underlying supply and demand from millions of buyers and sellers across the globe. High demand and increased buying activity for stocks cause prices to rise, while low demand and increased selling activity for stocks cause prices to decline. Banks are debt investors who are unlikely to provide a loan to these businesses without collateral or an abnormally high return. Therefore, it is effective for these entrepreneurs to give up a stake in their business in exchange for the capital provided.

Private stocks operate slightly differently as they are only offered to employees and certain investors. The market price of the underlying shares of the company and different commodities like oil, gold, copper, etc. depends on the demand and supply situation in the market as buyers and sellers place their respective orders for execution. The Taiwan Stock Exchange Corporation is the stock exchange of Taiwan and is based in Taipei.

Bombay Stock Exchange, the oldest stock exchange, established in 1875 in Asia is the ninth largest stock exchange in the world. BSE located at Dalal Street, Mumbai has more than 5500 listed on its platform. The London Stock Exchange is a British stock exchange located in Paternoster Square, London. It is also one of the oldest stock exchanges in the world since it was set up in 1801. As of December 2022, there were 1,934 companies listed on the LSE, with most of them being domestic firms. The bourse had a market capitalization of $3.2 trillion as of January 2023.

The total market capitalization of all listed HKSE stocks is more than 6.13 trillion dollars. HKSE generates a trading volume of more than 1 million derivatives contracts per day with HSCEI futures. Hong Kong Stock Exchange which was founded in the year 1891, is ranked sixth in the list of the world’s largest stock exchanges. The Shenzhen Stock Exchange is one of three major Chinese stock exchanges. Commonly known as the SZSE, it is headquartered in Shenzhen, China and is the second largest of the trio.

In 2017, the figures are totally different, as the North Americans dominate the market with 53% of the market capitalization, with just 8.4% for Japan and 6.2% for the United Kingdom. In 1988, eight of the ten largest companies in terms of market capitalization in the world were Japanese—of which five were banks—and only one, ExxonMobil, was from the United States. By most estimates, approximately 630,000 companies are now traded publicly throughout the world. The growth of global stock markets outside of the United States and Europe is a key reason that the number of public firms continues to grow. The U.S. still has the largest exchange in the world, but many of the largest exchanges now reside in Asia, which continues to grow in influence on the world stage. The NASDAQ (National Association of Securities Dealers Automated Quotations) is the second-largest stock market in the world in terms of market capitalization, and like the previous one, it is located in New York, in the iconic Times Square.

BSE is home to the S&P BSE SENSEX benchmark index which is the acronym for sensitive index. Sensex is comprised of 30 stocks representing different sectors of the economy. SSE is a little different when compared to its counterparts like NYSE, NASDAQ where market regulators impose circuit breakers to curb price volatility. Whenever there is adverse news or uncertainty Chinese government holds the right to stop trading for the day. Since launch in 2021, H2 Green Steel has raised more than €1.8 billion of equity in three financing rounds. The company closed its series A equity round of €86 million in May 2021 and announced the close of its series B1 round of €260 million in October 2022.

Stock exchanges have always carried an elevated sense of legitimacy, which ultimately provides access to the best capital and financing for companies that trade there. That’s why you’ll find non-American companies like Toyota, Sony, and Alibaba on U.S. exchanges. Added together, the 44 names outside of this aforementioned group combine for just $9 trillion, or 13%, of the world’s total market capitalization.

We have compiled a list of the 10 largest stock exchanges in the world based on the market capitalization data provided by the World Federation of Exchanges as of 2022. Over time, the Nasdaq purchased other stock markets, including the those in Boston and Philadelphia, the oldest in the United States. Today, the Nasdaq stock market is the largest stock market specialized in technology in the United States, with the largest volume of trades per hour in the world, and 3,800 companies listed. An equity market is a market in which shares of companies are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy. It gives companies access to capital to grow their business, and investors a piece of ownership in a company with the potential to realize gains in their investment based on the company’s future performance.