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In this article, we will take a look at the top 10 stock exchanges in the world. If you want to see some more of the top 10 stock exchanges, go directly to Top 5 Stock Exchanges in the World.
Stock exchanges are exchanges where different financial instruments such as stocks, bonds, and commodities are traded. For each trade, there is a buyer and a seller.
Stock exchanges are at the heart of capitalism. By being listed on stock exchanges, companies can raise capital to grow. If companies successfully grow with the capital they raise, they can hire more people and create more jobs. The increase in the value of their stocks further increases the wealth of the owners, who if they live in the same country, could help increase demand in that country. Because they are so important for the economy, stock exchanges are heavily regulated.
History
Image by Gerd Altmann from Pixabay
The first stock exchange was founded in Amsterdam in 1611 and the first stock to ever be traded was the Dutch East India Company and for a while it was the only company with any meaningful trading activity.
In the United States, the first stock exchange was the Philadelphia Stock Exchange which was founded in 1790. The stock exchange helped the U.S. financial sector develop and also helped the United States expand west. The Philadelphia Stock Exchange would later be surpassed by the New York Stock Exchange.
In 1971, the NASDAQ was founded as an exchange that allowed the buying and selling of stocks via a network of computers rather than in-person like on the NYSE during that time.
Given the growth of the U.S. and global economy, stock exchanges have since formed all across the world and the total market capitalization of listed companies on stock exchanges have grown substantially from the 1970's.
2022 Headwinds
Source: Federal Reserve.
Chairman Powell presents the Monetary Policy Report to the Senate Committee on Banking, Housing, and Urban Affairs. Report here: www.federalreserve.gov/monetarypolicy/2018-07-mpr-summary...
Stock exchanges have seen a lot of times of bullish sentiment and a lot of times of bearish sentiment. In times of bullish sentiment, the market capitalization of listed companies can grow and it can be easier for stock exchanges to make money. In times of bearish sentiment, however, it can be a little bit more difficult.
In terms of 2022, it seems like we're in a bear market given that the markets have fallen substantially from their highs.
The Federal Reserve has raised rates five times this year and as a result, it's harder for some businesses to grow. With the sudden rate of the raises, there is also concern that a recession could occur in 2023. According to a Bloomberg survey of 42 economists, there is a 60% chance of a recession over the next 12 months. According to some models, the odds of a recession are even higher.
Some also think the Federal Reserve could continue to raise interest rates.
Fed Chair Jerome Powell said of inflation in September, "Our expectation has been we would begin to see inflation come down, largely because of supply side healing. We haven’t. We have seen some supply side healing but inflation has not really come down."
Powell also commented on the interest rate hikes, "No one knows whether this process will lead to a recession or if so how significant that recession would be. That’s going to depend on how quickly wage and price inflation pressures come down, whether expectations remain anchored and also if we get more labor supply."
The United States
New York Stock Exchange
Image: flickr.com
In terms of the stock exchanges in the United States, the NYSE and the NASDAQ are the two main ones.
Intercontinental Exchange Inc. (NYSE:ICE) owns the NYSE exchange as well as several other futures and energy exchanges. The company began in May 2000 as an OTC trading platform that expanded through M&A to acquire future exchanges and clearing. In 2012, Intercontinental Exchange Inc. (NYSE:ICE) did a transformative deal to buy NYSE Euronext which owned the NYSE at the time. Given successful M&A, Intercontinental Exchange Inc. (NYSE:ICE) has rallied substantially since it went public. Due to the stock market decline, shares of the stock are down around 31.5% year to date in 2022.
ClearBridge Investments commented on Intercontinental Exchange Inc. (NYSE:ICE) in its Q2 2022 investor letter earlier in the year,
Intercontinental Exchange (ICE) operates global financial exchanges and clearing houses, which we believe is a resilient business at a good valuation. One of our key tactics in a potential recessionary environment is to focus on stocks where earnings and cash flow will hold up better than the market. ICE fits the bill as it benefits directly from volatility in financial markets, including in commodities where we are seeing major price swings. During the first half, ICE earnings estimates came up modestly, but its valuation multiple fell over 30%. Some of this weakness is due to ICE’s planned acquisition of Black Knight (BKI), which we think makes strategic sense. However, it is being done as Black Knight’s business is projected to slow as housing activity cools on higher mortgage rates, and the deal may also face regulatory scrutiny. Regardless, the recent weakness in the stock gave us a price below our estimate of long-term business value for a solid and resilient business and we acted accordingly.
For the second quarter, Intercontinental Exchange Inc. (NYSE:ICE) reported EPS of $1.32 versus the consensus of $1.27. Revenue for the period was $2.41 billion versus the consensus of $1.8 billion. While those numbers are strong, Intercontinental Exchange Inc. (NYSE:ICE)'s results might face headwinds in the future given the macro headwinds. On 10/6 Alex Kramm of UBS cut his price target to $116 from $128 but kept a 'Buy' rating citing softer than expected trends in the energy business as well as lower pricing. Kramm sees a significant sequential decline in the company's mortgage tech segment.
Of the 895 hedge funds in our database, 51 were long Intercontinental Exchange Inc. (NYSE:ICE) at the end of the second quarter. Cantillon Capital Management owned almost 4 million shares of Intercontinental Exchange Inc. (NYSE:ICE) at the end of the second quarter.
Nasdaq, Inc. (NASDAQ:NDAQ) is a global tech company that serves the capital markets and other industries. In addition to owning the NASDAQ exchange, the company offers data, analytics, software and services. On 10/12, Brian Bedell of Deutsche Bank lowerd his price target to $67 from $68 on the NASDAQ but nevertheless kept a 'Buy' rating. Bedell cited revised macro assumptions in his models, among other things.
The Federal Reserve rate hikes could cause market volatility, and that some companies might not go public when markets are extremely volatile. In addition to its valuation multiple, Nasdaq, Inc. (NASDAQ:NDAQ)'s revenue could be affected by the market volatility as well.
30 hedge funds we track owned shares of Nasdaq, Inc. (NASDAQ:NDAQ) at the end of Q2 2022. Among them, Diamond Hill Capital was the top holder at the end of Q2 with a holding of almost 2.04 million shares.
New York Wall Street sign.
Methodology
For our list, we took the top 10 stock exchanges from statista.com's Largest stock exchange operators worldwide as of August 2022, by market capitalization of listed companies. If you are interested, also check out 20 Largest Stock Exchanges In The World.
Top 10 Stock Exchanges in the World
#10 London Stock Exchange (LSE Group)
Market Capitalization of Listed Companies as of August 2022: $2.96 trillion
LSE Group includes the London Stock Exchange, which is one of the oldest stock exchanges in the world given its roots in the 17th century London. In the London Stock Exchange, companies and governments can issue securities such as shares to raise capital and investors such as large institutions and individuals can buy those securities. As of August 2022, the total value of the market cap of listed companies on the London Stock Exchange was almost $3 trillion.
Photo by David Vincent on Unsplash
#9 Saudi Stock Exchange (Tadawul)
Market Capitalization of Listed Companies as of August 2022: $3.04 trillion
Saudi Stock Exchange (Tadawul) is Saudi Arabia's largest and only stock exchange. Formed in 2007, the stock exchange is energy heavy given that Saudi Arabia is a major exporter of oil and gas. Among the listings, the world's largest oil and gas company, Saudi Aramco, is listed on the Saudi Stock Exchange (Tadawul). As of August 2022, the total market cap of listed companies on the Saudi Stock Exchange (Tadawul) was over $3 trillion.
Copyright: 3dsculptor / 123RF Stock Photo
#8 National Stock Exchange of India
Market Capitalization of Listed Companies as of August 2022: $3.49 trillion
Having started operations in 1994, National Stock Exchange of India is India's largest stock exchange with the total market cap of listed companies of almost $3.5 trillion. Given how big India's population is, the country's economy will likely grow substantially in the future and it's likely that the total value of companies listed on the National Stock Exchange of India will also grow. In addition to being a leading stock exchange, the National Stock Exchange of India is a leading derivatives exchange in terms of contracts traded.
Photo by Sylwia Bartyzel on Unsplash
#7 Hong Kong Exchanges
Market Capitalization of Listed Companies as of August 2022: $4.53 trillion
Hong Kong Exchanges is one of Greater China's leading stock exchanges. Given China's economy has expanded substantially in the last forty years and Hong Kong has historically been a global financial center, Hong Kong Exchanges have also grown substantially over the years. As of August 2022, Hong Kong Exchanges had a total market cap of listed companies of over $4.5 trillion, ranking it #7 on our list of Top 10 Stock Exchanges in the World.
Pixabay/Public domain
#6 Shenzhen Stock Exchange
Market Capitalization of Listed Companies as of August 2022: $4.9 trillion
Given Shenzhen is considered a tech hub in China, the Shenzhen Stock Exchange is one of the largest in China with a total market cap of listed companies of $4.9 trillion as of August 2022. In terms of its composition, the Shenzhen Stock Exchange includes emerging sector companies and individual investors play a bigger role in the exchange. The Shenzhen Stock Exchange ranks #6 on our list of Top 10 Stock Exchanges in the World.
Pixabay/Public domain
Click to continue reading and see Top 5 Stock Exchanges in the World.
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Disclosure: None. Top 10 Stock Exchanges in the World is originally published on Insider Monkey.
