The global share market has suffered a heavy fall in recent months due to the war in Ukraine and the rising price of crude oil. The FTSE 100 in Europe, the Nikkei 225 in Japan, and the Dow Jones in the USA all fell over 2%. Despite these declines, China’s share market has been rising and has beaten the global trend. There are many reasons behind the market’s recent drop. There is a growing geopolitical risk, due to escalation of China/US tensions over the Donbas region, and the upcoming US mid-term elections.
The United States stock market accounts for nearly 60% of the world’s stock market, followed by the United Kingdom and Japan. Besides the New York Stock Exchange, there are many other stock exchanges across the world. One of the oldest publicly-traded companies was the Dutch East Industry Company, which sold shares to the general public to fund its expeditions to Asia. Since then, stock exchanges have evolved, allowing brokers and dealers to conduct transactions in one place. The Hong Kong Stock Exchange is the largest exchange in China, and the London Stock Exchange is the primary exchange in the U.K.
Global indices, such as the MSCI, track the performance of stocks across the world. The MSCI index covers 85% of the world’s market capital. Those who try to beat an index assume that the index uses a standard stock selection methodology. They then try to beat the index by selecting different portfolios of S&P 500 stocks.