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Originally published: 17 September 2007
Original link:
http://www.portfolio.com/news-markets/international-news/portfolio/2007/09/17/Stock-Exchanges-Around-The-World
By John Hockenberry
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New York
New York Stock Exchange (NYSE)
Year Opened: 1792
Listed Companies: 3,615
Total Market Capitalization: $16.4 trillion
2006 Trade Volume: $21.8 trillion
Dow Jones Industrial Average 1-year change: +8;
5-year change: 50%
To expand its global reach, the
world's largest exchange became the first trans-Atlantic exchange in
2007 after a merger with Euronext, which operates markets in five
European Union nations. With the shift to electronic trading, the Big
Board announced last year that it was downsizing its operations by
laying off more than 500 employees and closing one of its five trading
floors. In the first half of 2007, London and Hong Kong each raised
more IPO money than New York did, but Wall Street is betting that the
merger and proposed changes to the Sarbanes-Oxley Act will put the
NYSE back on top.
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London
London Stock Exchange (LSE)
Year Opened: 1801
Listed Companies: 3,308
Total Market Capitalization: $4.1 trillion
2006 Trade Volume: $7.5 trillion
FTSE Index 6-month change: +0.8;
5-year change: 53.8%
The spheres in this kinetic
sculpture, which was installed to inaugurate the LSE's new building in
Paternoster Square in 2004, move throughout the day to represent the
market's oscillation. The exchange's combined boards raised $57
billion in initial public offerings in its last fiscal year--more than
any other in the world--with 139 newly listed companies from 25
countries. So far this year, London has continued to lead the world in
attracting new IPOs.
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Chicago
Chicago Board of Trade (CBOT)
Year Opened: 1848
Number of Products: 50
Value of Contracts Traded in 2006: $207
trillion
Daily Value of Contracts Traded: $3,210,
686
In 1851, the Chicago Board of Trade
introduced the world to financial futures trading with the "forward"
contract. At the time, the board was a simple agricultural market,
trading corn, wheat and oats. Since then, it has expanded to include
options and futures contracts on 50 products ranging from precious
metals, like gold, to interest rates to ethanol. Last year, the board
recorded its highest volume ever, trading more than 805 million
contracts. After merging with the Chicago Mercantile Exchange last
summer, the CBOT will soon leave behind its historic building for a
new combined trading floor set to open sometime this spring. |
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Tokyo
Tokyo Stock Exchange
Year Opened: 1878
Listed Companies: 2,425
Total Market Capitalization: $4.6 trillion
2006 Trade Volume: $5.8 trillion
Nikkei 225 Stock Average
6-month change: +8.2%; 5-year change: 68.6%
The last trader barked orders on
the floor of the Exchange on April 20, 1999. Since then, the chaotic
din of open-outcry has given way to the low drone of computers
executing transactions. The old floor reopened the following year as
an information center. It now includes an exhibition hall, media room,
and pictured here, the mission-control-like nerve center that houses
the servers of the second-largest market (by capitalization) in the
world.
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Buenos Aires
Liniers Market
Year Opened: 1901
Capacity: 35,000 cattle
Daily Volume: $8.5 million
Long before the world's first
stock exchange began trading, sellers brought their goods to markets
to haggle with buyers for a fair price. That tradition continues in
many countries. The planet's largest cattle auction takes place in
Buenos Aires, Argentina, where ranchers sell their steers directly to
supermarkets and slaughterhouses. Argentines are the world's largest
consumers of beef per capita, and the Liniers Market moves up to
50,000 head of cattle a week, setting the domestic price. When
President Nestor Kirchner recently tried to manipulate prices in an
effort to beat down inflation, brokers turned to the black market to
get the best prices for premium livestock.
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Hong Kong
Hong Kong Stock Exchange (HKSE)
Year Opened: 1914
Listed Companies: 1,206
Total Market Capitalization: $2.3 trillion
2006 Trade Volume: $430 million
Hang Seng Index
6-month change: +23%; 5-year change: +142%
As the favored exchange for
China's rapidly expanding industries, the HKSE trails only London in
new IPOs, raising nearly $43 billion in 2006. Forecasters are
confident that more huge listings are in the works as foreign
investors try to cash in on China's record growth. But that foreign
investment makes the exchange vulnerable to fluctuations in the global
economy. The Shanghai Stock Exchange sailed through the summer slump,
but Hong Kong was hit with record drops--followed by record gains.
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Chicago
Chicago Mercantile Exchange (CME)
Year Opened: 1919
Number of Products: 150
Value of Contracts Traded in 2006: $837
trillion
Daily Value of Contracts Traded: $10
million
The CME was established in order to
help farmers in need of financing secure prices for their future
production of grain and other commodities. (Its original name was the
Chicago Butter and Egg Board.) Over the years, it expanded to include
other commodities, such as livestock, frozen pork bellies, and lumber.
In December 2002, it became the first U.S. exchange to be publicly
traded, and this summer, it merged with the Chicago Board of Trade to
form the world's largest futures and commodities exchange, the CME
Group. |
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Nairobi, Kenya
Nairobi Stock Exchange
Year Opened: 1954
Listed Companies: 55
Total Market Capitalization: $12 billion
2006 Trade Volume: $2.1 billion
Nairobi Stock Exchange 2-Share Index
6-month change: +8%; 5-year change: 445%
In May 2006, the Nairobi Stock
Exchange hosted its first major IPO. State-controlled energy provider
Kenya Electricity Generating, also known as KenGen, sold off 30% of
its stock, and the $100 million-plus offering was more than 3 times
oversubscribed. That set off a trading spree, with reports of farmers
selling off cattle to buy stocks and banks offering loans to would-be
investors. Exchange officials estimate that 700,000 Kenyans--about 1
in 50--currently have money invested in the market.
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Kuwait
Kuwait Stock Exchange (KSE)
Year Opened: 1963
Listed Companies: 190
Total Market Capitalization: $106 billion
2006 Trade Volume: $60 billion
Kuwait Stock Exchange Index
6-month change: +28%; 5-year change: 606%
High oil prices have been a boon
to the exchange, which saw a record-setting index highs this summer.
But despite recent growth, the KSE is still at the mercy of the gulf's
region political instability and is therefore prone to volatile swings
as investors react to headlines. The exchange--the gulf region's
second-largest, behind Saudi Arabia's--does not allow women on the
main floor; they're required to make their investments in the ladies
trading hall nearby.
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Tehran, Iran
Tehran Stock Exchange
Year Opened: 1967
Listed Companies: 332
Total Market Capitalization: $37.7 billion
2006 Trade Volume: $4.8 billion
Tehran Stock Exchange Price Index (TEPIX)
6-month change: -4%; 5-year change: 158%
The exchange lost 24% of its
value in 2005, the year Mahmoud Ahmadinejad became president. Though
the exchange has since bounced back, it has never regained its peak,
in 2004, of 13,882 points. Ahmadinejad has failed to deliver on his
promise to translate Iran's oil revenue into the kind of prosperity
enjoyed by such Persian Gulf emirates as Dubai and Qatar.
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Săo Paulo
Brazilian Mercantile & Futures Exchange
Year Opened: 1986
Number of Products: 33
Value of 2006 Contracts: $10.6 trillion
Average Daily Trade Volume: $2 million
Greenhouse gases are bad news in
the rest of the world, but they could be a moneymaker for Latin
America's second-largest futures exchange. (Mexico's is larger.) In
April 2007, the exchange began trading on the future production of
ethanol; the refining of biofuels is a burgeoning industry in this
resource-rich nation. And the Exchange is the first financial market
to trade in carbon-emission credits. Companies and government entities
with programs that reduce greenhouse gases can apply for these credits
and then sell them to polluters. The city of Săo Paulo has chosen to
auction off 800,000 tons' worth of its carbon-emission credits through
the new system.
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Kathmandu
Nepal Stock Exchange
Year Opened: 1994
Listed Companies: 131
Total Market Capitalization: $3.5 billion
2006 Trade Volume: $33.7 million
Nepal Stock Exchange Index (NEPSE)
6-month change: +64%; 5-year change: 597%
This open-outcry market, where
traders call out their bids to negotiate the best price, added its
first electronic trading system in August 2007.
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Dubai, UAE
Dubai Financial Market
Year Opened: 2000
Listed Companies: 56
Total Market Capitalization: $98 billion
2006 Trade Volume: $95 billion
Dow Jones DMF Index
6-month change: -0.85%; 5-year change: N/A
Foreign investment now makes up
a third of the Dubai Financial Market's daily traded value as
investors seek to cash in on the success of the region's companies,
including Emaar Properties, one of the world's largest real estate
development companies, and Kuwait's Gulf Petroleum Investment.
In a sign of Dubai's growing international relevance, the exchange
became the first stock market in the Arab world to be indexed by Dow
Jones in April 2007. A recent bid by DMF's parent company, Borse
Dubai, for the Stockholm OMX Group, aims to further expand the
exchange's international presence.
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While the recent economic swoon started in the U.S.
housing market, it has since spread to exchanges in every corner of the
globe, from Tokyo to Săo Paulo. It’s a small world after all.
When things go seismic deep in the global economy, stock exchanges around
the world react like so many volcanoes. From New York’s Wall Street to
Tokyo’s Kabutocho district, their eruptions are the manifestations of
trillion-dollar forces roiling under the surface, spouting volatility, and
creating panic in a global market gone Vesuvius.
When things go seismic, watch out for the metaphor hose-down from
economists, journalists, and shrieking CNBC V.J.’s trying to convey a
picture bigger than what you can see by just riding the three-digit
updrafts and free falls. In a delicate balance of dependence and autonomy,
the exchanges of the world constitute tangible grounding mechanisms for
spooked investors. They are rooms in which buyers and sellers trade by
sets of rules that are, in the end, all that keep the global market from
dissolving into chaos after each morning bell. The stability flows from
how each market is simultaneously connected to the shifts of global
capital yet also able to generate transactions on its own local terms.
An exchange must assure two things: that all serious buyers and sellers
are represented and that the products of all sellers are deliverable and
of some demonstrable quality. The same assurances are required whether
cattle are changing hands in Argentina or shares of Sultan Center Food
Products are being traded in Kuwait.
On a quiet, tree-lined street in Kathmandu—just up the road from the Freak
Street market, fragrant with spices and diesel fumes and mountain-trekking
hippies—sits the Nepal Stock Exchange. Beneath whirring fans, traders
scrawl on whiteboards their “bids” and “asks,” worth about a million
dollars a day, for such companies as Everest Bank and Butwal Power.
Meanwhile, the New York Stock Exchange, the biggest of them all, carefully
maintains the elaborate illusion of a bustling trading floor, even though
that space functions mostly as a TV studio and tourist attraction for
visiting V.I.P.’s unaware of the vast computer networks that actually
handle the transactions. An average of $100 billion worth of trades clears
this legendary center of finance daily—only a quarter of the money that
circulates through the world’s markets every 24 hours.
Electronic trading knows no geographic constraints, so nowadays stock
exchanges can be found in places better known for thousand-year-old eggs
than for nest eggs. The explosion of trading across the globe has created
wealth in some of the most persistent pockets of poverty and produced
waves of volatility, as when this year’s U.S.-subprime-mortgage tsunami
hit beaches in South Korea, Australia, and Indonesia. In an era when
billions zip from continent to continent in milliseconds, it is
exhilarating to recall that modern capitalist economy is built on a
mysterious faith that, in the public forum of the exchange, the other guy
or gal is not going to screw you. An absence of trust has plagued one of
the world’s smallest stock exchanges, in Douala, Cameroon. Haunted by the
country’s enduring reputation for corruption, the Douala exchange has
hosted trades in shares of only one company—a local bottled-water
producer—since opening in April 2003. Meanwhile, the end of a corrupt
dictatorship has produced a boom in Kenya. There are more ways than ever
for U.S. investors to chase those returns: One can give cash directly to a
non-U.S. broker or buy one of a dizzying array of securities, such as
shares in specially structured mutual funds. The Federal Reserve estimates
that U.S. investors hold more than $4 trillion worth of foreign equity,
much of it in emerging markets in Asia and Latin America.
While most economists were caught off guard by this year’s trading
volatility, the modern exchange is capable as never before of weathering
sudden big moves. New regulations make it easier to figure out the real
value of what’s being traded. This transparency is essential in an
instantaneous-trading environment, where an Enron’s value can be carefully
manufactured over a period of years and then vaporized in a single
catastrophic week. The Sarbanes-Oxley Act, for example, was intended to
reveal and manage risk. But such regulations, in turn, create
opportunities for markets with fewer rules.
Witness the London Stock Exchange’s aggressive pursuit of initial public
offerings from companies in Asia. Last year, London became the world
leader in I.P.O.’s. And while global markets were rocked in the summer’s
subprime hysteria, Shanghai barely registered a blip. China’s vast
emerging economy was big enough to absorb the blows, suggesting that the
game is changing big-time. The future will belong to the market that can
set up the biggest tent for investors who want to manage and chase risk.
Having purchased Archipelago Holdings and Euronext, the NYSE Group
considered excising “NY” from its name to emphasize a more global
coverage. Many economists think that would have been absurd. “There will
always be value in having the best reputation for risk management,” says
Ev Ehrlich, former Commerce Department undersecretary. “New York is a
brand, and the volatility of emerging markets will only enhance that brand
as traders get burned in an unregulated environment.”
Yet stepping outside traditional regulations is emblematic of our volatile
age. New wealth, much of it in private equity, is following risk and
opportunity faster than new exchanges can pop into being. At the same
time, companies in emerging markets are scrambling to gain access to
mainstream capital, which has accelerated the trend toward multiple
listings of stocks on exchanges all over the world. “Technology makes it
cheaper and easier to do,” Ehrlich says. We may soon have one global
market in which all buyers and sellers gather to purchase virtually any
stock or commodity. There will be no single picture of that market. Even
from space, you can see only one side of the earth at a time. That’s
probably just a silly detail, but it’s no metaphor. Yet while no camera
will ever be able to see the whole world at once, savvy global traders
have to. Between the first open in New Zealand and the last close on the
U.S. West Coast are 19 time zones of financial daylight. That leaves just
five hours for uneasy dreams about what will happen tomorrow. Until
someone opens an exchange in Samoa.
See other exchanges and trading
floors:
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