Question

Analyse and discuss these 5 indices “Dow Jones Industrial Average”, “Straits Times Index”, “Hang Seng Index”, “Nikkei Index”, “Shanghai Composite Index” as follows:
(i) The market they represent
(ii) The weighting methodology
(iii) The number of component stocks
(iv) The compound annualized growth rate (CAGR) of each of these market from 1st January 1990 to 31st December 2017

Answer 1

Dow Jones Industrial Average

(i) U.S. Market

(ii) price-weighted average method

(iii) 30 large American publicly traded companies

Straits Times Index

(i) Singapore market

(ii) market value-weighted average method

(iii) the top 30 companies listed on the Singapore Exchange

Hang Seng Index

(i) Hong Kong market

(ii) market value-weighted average method

(iii) the 45 largest companies that trade on the Hong Kong Stock Exchange

Nikkei Index

(i) Tokyo Stock Exchange / Japan market

(ii) a price-weighted average method

(iii) top 225 blue-chip companies traded on the Tokyo Stock Exchange

Shanghai Composite Index

(i) China market

(ii) market value-weighted average method

(iii) all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange

	Closing Price (28 years)
	Jan 1 , 1990	Dec 31, 2017	CAGR
Dow Jone Industrial Average	2810.15	24,809.35	7.63%
Hang Seng Index	2836	30,028.29	8.41%
Nikkei Index	38,921.65	23,073.73	-196.84%
Shanghai Composite Index​​​​​​​	128.84	3,314.03	12.14%
Straits Times Index (Aug 31, 1998 starting price)	885.26	3427.97	5.60%

Formula used is CAGR = (( ending closing price - begining closing price )/ending closing price)^(1/ no. of years in between) -1 In case of Straits Times Index, no of years = approx.19. 35 , in all others it is 28 years