World Stock Markets and Exchanges

World stock markets explained, for large and small investors, including a discussion of securities, derivatives, and the general exchange of stocks around the globe.

The importance and reach of stock markets and exchanges is as broad as it is extensive. The major areas global stock markets deal with are listed company stocks, as well as securities and derivatives. Company stocks are included in the list of the stock exchanges, and are freely traded in stock markets around the world.

Around the world, business organizations, small to large investors, financial organizations, and governments of different nations are all major participants in stock market trading activities.

For the business enterprises, corporations, and governments, the world stock markets constitute one of the major sources of funding – as well as being an openly visible indicator to investors with regards to the financial health of the business.

Business entities that take part in stock market activities issue securities that may then be sold to the public. Capital is collected in this way, and these funds are primarily used for the expansion of a company’s business operations. The volume of transactions in any stock market depends on the liquidity of that particular market.

Together, the performance of all the world’s stock markets is directly responsible for a significant amount of the world’s economic condition – whether it be healthy, ailing, or trending sideways. In general, stock market growth is a leading indicator that the state of an economy is flourishing, while declining trends indicate of economic slowdown. Commentators suggest that stock markets often predict what will happen in the economy of that country around six months later.

Among the major stock exchanges of the world are the New York Stock Exchange (NYSE), the NASDAQ, the London Stock Exchange, the Bombay Stock Exchange, the Toronto Stock Exchange, the Hong Kong Stock Exchange, the Australian Stock Exchange, and the Euronext, among others.

Stock symbols, popularly known as ticker symbols, are used to differentiate stocks of different business organizations listed in the stock exchanges of the world. The companies listed in the New York Stock Exchange are presented by three characters; whereas four letter symbols are used to represent the companies listed in the NASDAQ exchange.

Participants in the stock market are institutions, and stock market operations may either be real, or virtual. If a stock exchange has a physical location it may execute stock trading through a process known as open outcry. Here, the stock prices are fixed by verbal bids. On the other hand, the buying and selling of stocks in many markets takes place over through closed computer networks or the internet. These are known as virtual stock exchanges.

The world’s stock markets also serve as a ‘clearing house’ for stock trading activities. This financial market performs the role of a mediator for transferring the securities issued by a particular company to the prospective buyers. In this process, it also ensures timely transfer of money.