Money, Banking, and International Finance500). Standard & Poor’s index includes 500 stocks that are listed on the Stock Market
Exchange. We list the major stock exchanges in the world in Table 1 along with their market
indices.
Table 1. The Major Stock Exchanges in the World
Country Name Major Market Index City
Australia Australian Securities Exchange Australian EXchange (AEX) Sydney
Canada Toronto Stock Exchange S&P/TSX 60 Toronto
China Hong Kong Stock Exchange Hang Seng Index Hong Kong
China Shanghai Stock Exchange Shanghai Stock Exchange (SSE) 180 Shanghai
England London Stock Exchange Financial Times Stock Exchange (FTSE) 100 London
France Euronext Paris Cotation Assistée en Continu (CAC) 40 Paris
Germany Frankfurt Stock Exchange Deutsche Aktien Xchange (DAX) 30 Frankfurt
Italy Borsa Italiana MIBTEL Milan
Japan Tokyo Stock Exchange Nikkei 225 Tokyo
Mexico Bolsa Mexicana de Valores Bolsa Mexicana de Valores (BMV) Mexico City
Netherlands Euronext Amsterdam Amsterdam EXchange (AEX) Amsterdam
United States New York Stock Exchange Dow Jones Industrial Average New York
United States NASDAQ NASDAQ -
Note: Numbers in the market indices indicate the number of stocks included in the calculation
Note: The Amsterdam Stock Exchange, Brussels Stock Exchange, and Paris Stock Exchange merged to form
Euronext.
Market indices provide two benefits. First, the market indices provide fast information.
Financial analysts calculate a market index in seconds and distribute the index to investors
instantly. Second, private companies calculate the market indices. Thus, government does not
influence the numbers.
A stock market, occasionally, experiences a rapid drop in stock prices, which precipitate a
stock market crash. A stock market crash means a dramatic drop in stock prices during a short
time period. Unfortunately, a stock market crash bankrupts investment companies, insurance
companies, pension funds, and commercial banks. Although commercial banks are not directly
involved with the stock market, they may have granted loans to investors who cannot repay.
Finally, a stock market crash in one market can trigger another stock market crash, even a stock
market located in a foreign country.
Stock market crash became the prelude to the Great Depression. In 1929, the stock market
crashed on October 24, October 28, and October 29. Afterwards, the unemployment rate peaked
at 26% in the United States. Moreover, the New York Stock Exchange crashed on October 19,
- The Dow Jones fell by 508 points (or 27.8%) in one day, the largest loss in U.S. history.
However, the United States did not enter a recession because the Federal Reserve came to the
rescue, providing emergency loans to the financial institutions. Then the United States
experienced a stock market crash in March 2000, which triggered the 2001 Recession. Many
people call this the dot-com crash because stock value for many internet companies became
worthless overnight. Finally, the U.S. experienced the 2007 Great Recession, which became the