A stock represents an ownership or equity stake in a corporation. If you are a stockholder, you own a proportionate share in the corporation’s assets and you may be paid a share of the company’s earnings in the form of dividends.
The two main categories of stocks are common stock and preferred stock. Preferred stockholders have priority over common stockholders in terms of dividend payout and in recouping their investment if the company fails or liquidates. However, preferred stockholders, unlike common stockholders, cannot vote for directors of the company.
Stocks fall into five different categories:
Income Stocks pay unusually large dividends that can be used as a means of generating income without selling the stock, but the price of the stock generally does not rise very quickly.
Issued by very solid and reliable companies with long histories of consistent growth and stability, blue-chip stocks usually pay small but regular dividends and maintain a fairly steady price throughout market ups and downs.
Issued by young, entrepreneurial companies that are experiencing a faster growth rate than their general industries, these stocks normally pay little or no dividend because the company needs all of its earnings to finance expansion. Since they are issued by companies with no proven track record, growth stocks are riskier than other types of stocks but also offer more appreciation potential.
Cyclical stocks are issued by companies that are affected by general economic trends. The prices of these stocks tend to go down during recessionary periods and increase during economic booms. Examples of cyclical stock companies include automobile, heavy machinery and home building
The opposite of cyclical stocks, defensive stocks—issued by companies producing staples such as food, beverages, drugs and insurance—typically maintain their value during recessionary periods.
See all stocks available across our markets in the Listings Directory.
Ten largest stock exchanges in the world by market capitalization in 2011:
1. New York Stock Exchange (NYSE) – Headquartered in New York City. Market Capitalization (2011, USD Billions) – 14,242; Trade Value (2011, USD Billions) – 20,161.
The largest stock exchange in the world by both market capitalization and trade value. NYSE is the premier listing venue for the world’s leading large- and medium-sized companies. Operated by NYSE Euronext, the holding company created by the combination of NYSE Group, Inc. and Euronext N.V., NYSE offers a broad and growin array of financial products and services in cash equities, futures, options, exchange-traded products (ETPs), bonds, market data, and commercial technology solutions. Featuring more than 8000 listed issues it includes 90% of the Dow Jones Industrial Average and 82% of the S&P 500 stock market indexes volume.
2. NASDAQ OMX – Headquartered in New York City. Market Capitalization (2011, USD Billions) – 4,687; Trade Value (2011, USD Billions) – 13,552.
Second largest stock exchange in the world by market capitalization and trade value. The exchange is owned by NASDAQ OMX Group which also owns and operates 24 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed invome, derivatives, commodities, futures and structured products. It is a home to approximately 3,400 listed companies and its main index is the NASDAQ Composite, which has been published since its inception. Stock market is also followed by S&P 500 index.
3. Tokyo Stock Exchange – Headquartered in Tokyo. Market Capitalization (2011, USD Billions) – 3,325; Trade Value (2011, USD Billions) – 3,972.
Third largest stock exchange market in the world by aggregate market capitalization of its listed companies. It had 2,292 companies which are separated into the First Section for large companies, the Second Section for mid-sized companies, and the Mothers section for high growth startup companies. The main indices tracking Tokyo Stock Exchange are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun, the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies. 94 domestic and 10 foreign securities companies participate in TSE trading. The London Stock Exchange and the Tokyo Stock Exchange are developing jointly traded products and share technology.
4. London Stock Exchange – Headquartered in London. Market Capitalization (2011, USD Billions) – 3,266; Trade Value (2011, USD Billions) – 2,871.
Located in London City, it is the oldest and fourth-largest stock exchange in the world. The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul’s Cathedral. It is the most international of all the world’s stock exchanges, with around 3,000 companies from over 70 countries admitted to trading on its markets. The London Stock Exchange runs several markets for listing, giving an opportunity for different sized companies to list. For the biggest companies exists the Premium Listed Main Market, while in terms of smaller SME’s the Stock Exchange operates the Alternative Investment Market and for international companies that fall outside the EU, it operates the Depository Receipt scheme as a way of listing and raising capital.
5. Shanghai Stock Exchange – Headquartered in Shanghai. Market Capitalization (2011, USD Billions) – 2,357; Trade Value (2011, USD Billions) – 3,658.
It is the world’s 5th largest stock market by market capitalization and one of the two stock exchanges operating independently in the People’s Republic of China. Unlike the Hong Kong Stock Exchange, the SSE is not entirely open to foreign investors. The main reason is tight capital account controls by Chinese authorities. The securities listed at the SSE include the three main categories of stocks, bonds, and funds. Bonds traded on SSE include treasury bonds, corporate bonds, and convertible corporate bonds. The largest company in SSE is PetroChina (market value – 3,656.20 billion).
6. Hong Kong Stock Exchange – Headquartered in Hong Kong. Market Capitalization (2011, USD Billions) – 2,258; Trade Value (2011, USD Billions) – 1,447.
It is the third largest stock exchange in Asia and the sixth largest in the world in terms of market capitalization. Hong Kong Stock Exchange (SEHK) has about 1,477 listed companies and it operates securities market and a derivatives market in Hong Kong and the clearing houses for those markets. The three largest stocks by market capitalisation in Hong Kong Stock Exchange are PetroChina, Industrial & Commercial Bank of China, and China Mobile.
7. Toronto Stock Exchange – Headquartered in Toronto. Market Capitalization (2011, USD Billions) – 1,912; Trade Value (2011, USD Billions) – 1,542.
It is the largest stock exchange in Canada and the third largest in North America. Toronto Stock Exchange is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities. A broad range of businesses from Canada, the United States, Europe, and other countries are represented on the exchange. The exchange lists conventional securities, exchange-traded funds, split share corporations, income trusts and investment funds. Toronto Stock Exchange is the leader in the mining and oil & gas sector, including such companies like Cameco Corporation, Canadian Natural Resources Ltd., EnCana Corporation, Husky Energy Inc., Imperial Oil Ltd., and others.
8. BM&F Bovespa – Headquartered in Sao Paulo. Market Capitalization (2011, USD Billions) – 1,229; Trade Value (2011, USD Billions) – 931.
Founded in 1890, today BM&F Bovespa is the largest stock exchange in South America and 8th largest in the world by market capitalization. It is the most important Brazilian institution to intermediate equity market transactions and the only securities, commodities and futures exchange in Brazil. BM&F Bovespa acts as a driver for the Brazilian capital markets. There are about 381 listed companies at Bovespa and its benchmark indicator is the Indice Bovespa.
9. Australian Securities Exchange – Headquartered in Sydney. Market Capitalization (2011, USD Billions) – 1,198; Trade Value (2011, USD Billions) – 1,197.
The Australian Securities Exchange is Australia’s primary securities exchange and it was created back in 2006 when the merger of Australian Stock Exchange and the Sydney Futures Exchange took place. Today Australian Securities Exchange is 9th largest stock exchange in the world by market capitalization and has an average daily turnover of 4,685 billion dollar. Products and services available for trading on ASX include shares, futures, exchange traded options, warrants, contracts for difference, exchange-traded funds, real estate investment trusts, listed investment companies and interest rate securities. The major market index is the S&P/ASX 200.
10. Deutsche Börse – Headquartered in Frankfurt. Market Capitalization (2011, USD Billions) – 1,185; Trade Value (2011, USD Billions) – 1,758.
Deutsche Börse is one of the world’s leading exchange organisations providing investors, financial institutions and companies access to global capital markets. The exchange covers the entire process chain from securities and derivatives trading, clearing, settlement and custody, through to market data and the development and operation of electronic trading system. Deutsche Börse has an approximately 765 listed companies with a combined market capitalization of 1,185 trillion USD.