The fundamental principles of trading remain the same across the globe; however, the approach for investors may differ from country to country. When it comes to managing trading in the biggest stock markets in the world, the process seems to be a bit complex system to understand. This article will have an overview of the biggest global stock markets and their functions explained by an expert.
Stock market explained by Kavan Choksi
A stock market is a place where different listed companies’ shares are available for buying and selling. Those investors who own the stocks of a company is known as a shareholder, stockholder, or partial owners. Kavan Choksi further explains that stock markets offer the companies access to more capital as they grow, like the additional funds for research and development, etc. The fund raised through a company’s IPO (initial public offering) can also be used for acquisition, further growth, or merger, which is a strategy companies take to grow bigger.
The major stock markets globally where stockbrokers from across the globe buy and sell are;
– The London Stock Exchange,
– The New York Stock Exchange, and
– The NASDAQ
These three are different entities and exist independently. Each of these stock markets is responsible for a unique set of listed corporates. As being the biggest in the world, these exchanges are combinedly known as the “big three” in stock trading.
The primary stock market among these and the biggest one is the London Stock Exchange. It is one of the oldest stock markets in the world, which was established in 1801. It is also the world’s largest exchange and lists about 1,200 companies. So, LSE is considered to be more diverse and complex than the NYSE and NASDAQ. It is possible to list various types of stocks on LSE.
The ordinary shares mean those shared with gives the voting rights to the shareholders by participating in the company’s annual meetings. Alternatively, the preference shares may not allow the voting rights to the shareholders. The investors who are planning to trade on these stocks can choose from various options as below.
– TEPs or Traded Endowment Plans,
– Unit Trusts/OEICs,
– Fixed Interest Securities,
– Investment Trusts, including scrips, shares, warrants, etc.
You can explore the FTSE 100, which is a market index that tracks the performance of 100 leading blue-chip companies trading on the London Stock Exchange. This is also called the “footsie,” which is a widely used indicator to measure how the UK stocks perform overall.
Companies can list their stocks on either LSE or the NASDAQ but cannot do the listing on both. LSE also consists of a set of international index groups. It consists of FTSE 100 Index and other indices like FTSE 250 as well as FTSE 350 etc. These indices track the companies which are listed on LSE with capitalizations of £2.5 billion to £10 billion or between £500 million and £2.5 billion etc.
It is very easy for investors registered with an authorized trading house to buy and sell stocks in these top stock markets, explains Kavan Choksi. He further explains the procedure and tips for the same.