The stock market or equity market is where buyers and sellers trade equity (stocks, shares) either through a stock exchange or over the counter. Investors trade listed shares through a stock exchange and unlisted shares over the counter (privately).

Stock exchange, also called stock market or in continental Europe bourse, organized market for the sale and purchase of securities such as shares, stocks, and bonds.

In most countries the stock exchange has two important functions. As a ready market for securities, it ensures their liquidity and thus encourages people to channel savings into corporate investment. As a pricing mechanism, it allocates capital among firms by determining prices that reflect the true investment value of a company’s stock. (Ideally, this price represents the present value of the stream of expected income per share.)

Size of the markets

The total market capitalization of all publicly traded securities worldwide rose from US$2.5 trillion in 1980 to US$93.7 trillion at the end of 2020

As of 2016, there are 60 stock exchanges in the world. Of these, there are 16 exchanges with a market capitalization of $1 trillion or more, and they account for 87% of global market capitalization. Apart from the Australian Securities Exchange, these 16 exchanges are all in North America, Europe, or Asia

By country, the largest stock markets as of January 2021 are in the United States of America (about 55.9%), followed by Japan (about 7.4%) and China (about 5.4%).

Stock exchange

Stock exchange vs. stock market. A stock exchange is the physical facility where investors trade shares. The New York Stock Exchange and the London Stock Exchange, for example, are stock exchanges.

The stock market is a general term that refers to a loose network of economic transactions. It has an abstract meaning, i.e., the mechanism for buying and selling shares.

It is like the difference between the oil market and a gas station (UK: petrol station). One is a general term for a specific market. The other term, on the other hand, refers to a physical place.

Categorizing shares

In the stock market, we categorize shares several different ways. One common way is according to where a company’s headquarters are.

For example, GlaxoSmithKline and HSBC have their headquarters in the UK. Therefore, we consider them as part of the London Stock Exchange.

However, we can also trade their shares at exchanges across the world.

At the end of 2014, the size of the global stock market (total market capitalization) was approximately $69 trillion,

The largest market in the world is in the United States (34% of world total), followed by Japan (approx. 6%), and then the UK (approx. 6%). Market capitalization of listed domestic companies (current US$)

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