A stock exchange is a marketplace where stockbrokers and traders buy and sell stocks, bonds, securities, and other complex financial instruments. Stock exchanges can be considered a good measure for the resident country's economic health and a key indicator of global economic strength. (Growth in financial market = higher living standards and improved employment rates).
The stock market is among the most vital constituents of a free-market economy as it offers companies access to capital in exchange for granting investors a stake of ownership. The biggest stock exchanges in the world (the "$1 trillion club" exchanges) account for over 80% of the global market capitalisation.
Stock exchanges have been in existence for over four centuries. The first stock exchange was launched in Amsterdam, the Netherlands in 1602 and tasked with trading the Dutch East India Company's shares. Today, there are many major stock markets across the globe ranging in trading volume and size. Below is a list of the ten biggest stock exchanges in the world by market cap. (Market Capitalisation – the overall value of the shares of the companies listed on an exchange).
The Ten Biggest Stock Exchanges in the World
We'll review the ten largest stock exchanges in the world by market capitalisation as of September 2020 in descending order.
1. New York Stock Exchange (NYSE)The New York Stock Exchange (NYSE) was founded in 1792 on the venerable Wall Street, New York. The exchange didn't operate under the name "NYSE" until 1963. The NYSE endured a turbulent journey on its way to the top, including infamous events like the Wall Street Crash and Black Tuesday in 1929 and 1987, respectively. It has also survived the many changes that have impacted the globe over the past two centuries.
Since the end of the First World War, it has remained the world's largest stock exchange by market capitalisation, overtaking the London Stock Exchange. Today, it still sits atop the world stock market pile with a market capitalisation of $28.5 trillion (about 40% of the overall world stock market value) and over 2,400 listed companies spanning across sectors such as healthcare, energy, finance, etc.
The NYSE was taken over in 2012 by Intercontinental Exchange, an American futures exchange group. The Dow Jones is the primary index for tracking the NYSE value, though components can be listed on the NASDAQ. Some of the most famous companies listed on the NYSE include Citigroup Inc. (C), Exxon Mobil Corp (XOM), and Pfizer Inc. (G.E.).
2. NASDAQ Stock Exchange
The National Association of Securities Dealers Automated Quotations (NASDAQ) stock exchange was founded in 1971 by local stockbrokers. It is located at the famous Times Square, New York. The NASDAQ has always been an electronic market, always using a computer and telephone-based trading system. This makes it the first electronic stock market.
Although less than five decades old, NASDAQ has made it to the top as one of the biggest stock markets around the world. The presence of major global tech companies within its listing has made it the "Mecca" for tech companies. The NASDAQ stock exchange has thousands of companies listed on it, including notable tech giants like Apple (APPL), Facebook (F.B.), Microsoft (MSFT) and Tesla (TSLA).
The NASDAQ stock exchange market capitalisation is $10 trillion, which ranks it as the second-biggest stock exchange in the world and the largest market capitalisation of tech stocks. The NASDAQ 100 is the index used to track the performance of the NASDAQ stock exchange.
3. Tokyo Stock Exchange (TSE)Founded in 1878, the Tokyo Stock Exchange (TSE) is Japan's largest stock exchange. The TSE has its fair share of a turbulent history mainly post World War II. The Tokyo Stock Market was suspended for four years between August 1945 and April 1949 because of Japan's exploits during the war. It was later rebranded in 1949, resuming full operation in the process.
Today, the TSE is widely known under the name of its recent owners – Japan Exchange group, an Asian-based company. This financial services giant manages multiple securities exchanges, including the TSE and the Osaka Securities Exchange. The group was formed as the result of a 2013 merger between the TSE and the Osaka Securities Exchange. This merger has placed the TSE among the top 3 stock markets around the world with a market cap of $5.1 trillion.
There are over 3500 companies currently listed on the Tokyo Stock Exchange. The benchmark index for the TSE is the Nikkei 225, which is a measure of the performance of the top 225 largest and most liquid companies in Japan listed on the Tokyo Stock Exchange including Toyota, Sony, Honda, Suzuki, etc.
4.Shanghai Stock Exchange (SSE)
The origin of the Shanghai Stock Exchange dates back to 1866. It was however suspended in 1949 because of the Chinese revolution. The Shanghai Stock Exchange as we know it today was founded in 1990. The SSE is among three independent major stock markets in the People's Republic of China. The other two are Hong Kong and Shenzhen, which also feature on the list of biggest stock exchanges in the world. The Shanghai Stock Exchange ranks as the fourth largest stock exchange in the world, with a market cap of $4.9 trillion and over 1,100 companies listed.
Each stock listed on this exchange has two share types – "A" and "B." "A" shares are quoted in the Chinese Yuan currency, and "B" shares are priced in U.S. dollars. Investors can use the SSE Composite index or the Shanghai Composite to track the performance of companies listed on the SSE, including the largest stocks like the Agricultural Bank of China, PetroChina, and the Industrial and Commercial Bank of China.
5. Euronext Stock Exchange
The Euronext Stock Exchange was founded in 2000 to represent the entire European economy. This explains why it is traded in Euros. The exchange originated from the Amsterdam Stock Exchange, making it the oldest stock exchange in the world. It's a PAN-European exchange, spanning the Netherlands, Belgium, France, Portugal, the U.K., and Ireland.
The Euronext Stock Exchange has experienced some transitionary period. It merged with the NYSE Group in 2007 to form NYSE Euronext. In 2013, the NYSE Euronext was completely taken over by the Intercontinental Exchange. In June 2014, Euronext went public, which ensured it became a standalone company again.
Euronext is the fifth-biggest stock exchange in the world, with a market capitalisation of $4.82 trillion and over 1300 companies listed on the exchange. As the exchange spans across several countries, several indices can be used to monitor its performance. However, the dominant index for the Euronext Stock Exchange is the Euronext 100, which consists of the 100 largest and most liquid stocks listed on the Euronext Stock Exchange, including Renault, Christian Dior, AXA, etc.
6. London Stock Exchange (LSE)
Though founded in 1801, the exchange's origin dates back to 1698, making it one of the world's oldest stock exchanges. Until the end of the First World War, it was the biggest stock exchange in the world. It has unseated by the NYSE. The LSE is currently ranked the sixth-largest stock exchange in the world and one of Europe's largest stock exchange with a market capitalisation of $4.59 trillion and over 3000 companies listed on the exchange.
The London Stock Exchange is owned and operated by the London Stock Exchange Group, created in 2007 from a merger between the LSE and the Borsa Italiana. The exchange is famed as a multi-stock exchange and the most international stock exchange, operating across 70 countries.
Investors can monitor the performance of the London Stock Exchange with the FTSE 100 Index. This is the primary index of the LSE consisting of the 100 largest companies by market cap listed on the London Stock Exchange, including GlaxoSmithKline, B.P., Barclays, etc. The exchange has other indices for tracking the London Stock Exchange-listed companies like the FTSE 250, the FTSE All-Share, and the FTSE Small Cap.
7. Hong Kong Stock Exchange (SEHK)
The Exchange was founded by the Association of Stockbrokers in Hong Kong in 1891 and renamed to the Hong Kong Stock Exchange in 1914. The Hong Kong Stock Exchange is among the three major stock markets in P.R. of China. Its trading floor was shut down in 2017 due to the digital shift towards electronic trading. The Hong Kong government is the single biggest shareholder in the exchange and wields power to appoint nearly 50% of the exchange's board of directors.
The Exchange was founded by the Association of Stockbrokers in Hong Kong in 1891 and renamed to the Hong Kong Stock Exchange in 1914. The Hong Kong Stock Exchange is among the three major stock markets in P.R. of China. Its trading floor was shut down in 2017 due to the digital shift towards electronic trading. The Hong Kong government is the single biggest shareholder in the exchange and wields power to appoint nearly 50% of the exchange's board of directors.
The Hong Kong Stock Exchange is currently the third-largest stock exchange in Asia, and the seventh biggest stock exchange in the world by market capitalisation. The Hong Kong Stock Exchange's market capitalisation is $4.23 trillion with over 2,315 companies currently listed on it. According to information gathered from the Chinese financial magazines, over 50% of the listed companies listed operate in Mainland China.
A significant portion of the SEHK market cap represents its 20 largest and most liquid stocks, including companies like AIA, HSBC Holdings, Tencent Holdings, etc.
8. Shenzhen Stock Exchange (SZSE)
Initially founded in 1987, the Shenzhen Stock Exchange wasn't officially operational until 1990. It is the third-largest exchange in the P.R. of China. The Shenzhen Stock Exchange is a self-regulated body supervised by the CSRC (China Securities Regulatory Commission). The Shenzhen Stock Exchange has a market capitalisation of $3.28 trillion, which makes it the eighth biggest stock exchange in the world. The SZSE currently has over 2000 companies listed and unsurprisingly; over 50% of the listed companies are based in China.
Initially founded in 1987, the Shenzhen Stock Exchange wasn't officially operational until 1990. It is the third-largest exchange in the P.R. of China. The Shenzhen Stock Exchange is a self-regulated body supervised by the CSRC (China Securities Regulatory Commission). The Shenzhen Stock Exchange has a market capitalisation of $3.28 trillion, which makes it the eighth biggest stock exchange in the world. The SZSE currently has over 2000 companies listed and unsurprisingly; over 50% of the listed companies are based in China.
As most of the listed companies on the Shenzhen Stock Exchange are predominantly based in China, the SZSE trades shares in its local currency, the Chinese Yuan. The SZSE is home to the SME Board which was launched in 2004 for companies in the manufacturing industry and the ChiNext Board, which was established in 2009 to replicate the U.S. NASDAQ's focus on tech start-ups.
9. Toronto Stock Exchange (TSX)
Established in 1852, the Toronto Stock Exchange has gone on to be ranked among the most popular and biggest stock exchanges in the world. It’s Canada’s largest stock market. Owned and controlled by the TSX Group, the TSX merged with the Montreal Stock Exchange in 2009 which resulted in its parent company being renamed the TMX Group from TSX Group.
Established in 1852, the Toronto Stock Exchange has gone on to be ranked among the most popular and biggest stock exchanges in the world. It’s Canada’s largest stock market. Owned and controlled by the TSX Group, the TSX merged with the Montreal Stock Exchange in 2009 which resulted in its parent company being renamed the TMX Group from TSX Group.
In 2011, the TMX Group was in talks with the London Stock Exchange over a merger; unfortunately for the participating parties, the negotiations fell through. The TSX is the ninth largest stock exchange in the world and the third-largest in North America by market capitalisation with a market cap of $3 trillion and over 2,200 companies listed on the exchange.
The TSX performance can be measured by using the S&P/TSX Composite Index, which is a representation of the 100 largest companies listed on the TSX and accounts for approximately 70% of the overall market capitalisation of the Toronto Stock Exchange. Some of the notable companies within the index include Suncor Energy Inc. and Royal Bank of Canada.
10. Bombay Stock Exchange (BSE)
The Bombay Stock Exchange was founded in 1875 and located at the Dalal Street, Mumbai. It is the first and oldest stock exchange in Asia. The BSE is the tenth biggest stock exchange in the world by market cap with a market capitalisation of $2.05 trillion.
The Bombay Stock Exchange was founded in 1875 and located at the Dalal Street, Mumbai. It is the first and oldest stock exchange in Asia. The BSE is the tenth biggest stock exchange in the world by market cap with a market capitalisation of $2.05 trillion.
Statistically, it is the stock market with the most number of listed companies when compared with other stock markets listed above. According to the Visual Capitalist data, the Bombay Stock Exchange has over 5,700 companies listed on the exchange. However, most of the listed companies are small-cap companies which result in the lower market cap of the Bombay Stock Exchange.
Conclusion
The world stock market is a very vast area. Still, stocks are an alluring investment vehicle. They’re easily understood by many traders, especially when compared to other investment options, e.g. cryptocurrencies. Getting an education and learning the factors that influence the price movements of stocks might be a good idea, particularly if you’re a newer investor/trader looking for investment opportunities.
Trading stock exchanges with Investlite
Trading directly on the prices of stock exchanges may be impossible; however, investors can trade the stock indexes of the biggest stock exchanges in the world mentioned above via an exchange-traded fund (ETF) or a Contract for Difference (CFD).
Investlite offers a live account for trading CFDs of indices and stocks. You can also build experience on our platform with the free demo account. If you aren’t sure that you’re ready to start trading, take a tour of our academy session and learn more about financial markets with our array of online courses. In addition to our educational resources (articles, videos, webinars, and updates) we offer:
- A top-ranked trading platform that is internationally regulated.
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FAQS
Which is the most famous exchange?
The New York Stock Exchange (NYSE) is possibly the most famous stock exchange in the world with its famed 9.30 am opening bell which is broadcasted and presented by top business figures and celebrities. The NYSE is nicknamed “The Big Board” and was founded in 1817 though it wasn’t operational under the NYSE name until 1963. It's headquartered at 11 Wall Street, Manhattan, New York.
What are the top 5 stock exchanges?
The top five stock exchanges by market capitalisation are among the famed “$1 trillion club.” This means that the value of stocks listed on each exchange is greater than or equal to $1 trillion. The five biggest stock exchanges in the world by market cap as of September 2020 include:
- New York Stock Exchange (NYSE) – $28.5 trillion
- The NASDAQ Stock Exchange – $10 trillion
- Tokyo Stock Exchange (TSE) – $5.1 trillion.
- Shanghai Stock Exchange (SSE) – $4.9 trillion
- Euronext Stock Exchange – $4.82 trillion
What is the world stock market?
The world stock market is the collection of existing markets and exchanges worldwide such as the Euronext Stock Exchange of Europe, the Shanghai Stock Exchange, the New York Stock Exchange, etc. The world stock market is also referred to as the equity market.
Stock exchanges exist to help with the trading and issuing of stocks or equities of publicly held companies, bonds, and other securities classes. These trades can be executed through formal exchanges or OTC (over-the-counter) marketplaces or traded as Contracts for difference (CFDs), a unique tool for trading without having to own the underlying asset.
What are the two major stock markets?
The two major stock markets ranked by market capitalisation are the New York Stock Exchange (NYSE) and the NASDAQ Stock Exchange, both located in New York City (Wall Street and Times Square, respectively), USA with a market capitalisation of $28.5 trillion and $10 trillion, respectively.
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