Executive Summary

The current status of the top 10 stock exchanges show a varying path to prosperity for each

Ongoing success of all exchanges YTD suggest an economic revival across the globe despite lackluster global economic data

Future wealth projections suggest a movement in the rankings could come in the near future, particularly in favor of Asian exchanges



(Data sources: Google Finance, Stock Exchange Websites, Value Walk, The Modest Wallet, World Federation of Exchanges)



Top 10 Stock Exchanges and How They Rose to Power



NYSE (USA) – the New York Stock Exchange (NYSE) has held the title of the world’s largest stock exchange since the end of World War I, when it surpassed the trading levels of the London Stock Exchange. Founded in 1792, the NYSE has a strong enough domestic presence that over 54% of American investors are said to have invested in NYSE listed stocks. But their reach extends to the international level as well, as roughly 40% of the world’s stock market capitalization comes from solely the NYSE.

– the New York Stock Exchange (NYSE) has held the title of the world’s largest stock exchange since the end of World War I, when it surpassed the trading levels of the London Stock Exchange. Founded in 1792, the NYSE has a strong enough domestic presence that over 54% of American investors are said to have invested in NYSE listed stocks. But their reach extends to the international level as well, as roughly 40% of the world’s stock market capitalization comes from solely the NYSE. Nasdaq (USA) – founded in 1971 in New York City, the NASDAQ Stock Market is one of the newest exchanges to breach the world’s top 10. Despite its newness, the NASDAQ has quickly made a name for itself by being labeled the ‘Mecca of technology companies.’ Specifically, the NASDAQ lists a majority of the world’s largest and fastest-growing technology companies including Apple, Alphabet, Facebook, Microsoft, and Tesla, to name a few. The NASDAQ has stood by its status as a growth-focused index, as it has the third-best Year-To-Date (YTD) performance, up over 22%, out of the top 10 worldwide stock exchanges.

– founded in 1971 in New York City, the NASDAQ Stock Market is one of the newest exchanges to breach the world’s top 10. Despite its newness, the NASDAQ has quickly made a name for itself by being labeled the ‘Mecca of technology companies.’ Specifically, the NASDAQ lists a majority of the world’s largest and fastest-growing technology companies including Apple, Alphabet, Facebook, Microsoft, and Tesla, to name a few. The NASDAQ has stood by its status as a growth-focused index, as it has the third-best Year-To-Date (YTD) performance, up over 22%, out of the top 10 worldwide stock exchanges. Tokyo (Japan) – the Tokyo Stock Exchange (TSE), founded in 1878, is the third-largest stock exchange in the world by market capitalization, despite having only about half of the value of the NASDAQ. This large gap between the 2nd and 3rd largest is due to American companies demonstrating astronomical growth, particularly in the technology sector, in recent years, even when compared to the sustained growth of the rest of the world’s developed economies. While the TSE’s origin dates all the way back to the 19th century, the exchange was closed for four years after World War II before continuing trading activity in 1949. The TSE is famously known by its benchmark index, the Nikkei 225, which is up over 10% YTD and contains many blue-chip stocks such as Toyota, Honda, Sony, and Suzuki.

– the Tokyo Stock Exchange (TSE), founded in 1878, is the third-largest stock exchange in the world by market capitalization, despite having only about half of the value of the NASDAQ. This large gap between the 2nd and 3rd largest is due to American companies demonstrating astronomical growth, particularly in the technology sector, in recent years, even when compared to the sustained growth of the rest of the world’s developed economies. While the TSE’s origin dates all the way back to the 19th century, the exchange was closed for four years after World War II before continuing trading activity in 1949. The TSE is famously known by its benchmark index, the Nikkei 225, which is up over 10% YTD and contains many blue-chip stocks such as Toyota, Honda, Sony, and Suzuki. Shanghai (China) – founded in the great year of 1866, the Shanghai Stock Exchange (SSE) makes its mark by being the largest stock exchange in China by market capitalization. Similar to the temporary closing of the TSE, the Shanghai Stock Exchange was suspended in 1949 due to the Chinese Revolution. This closing ended up reshaping the exchange, as the modern version of the SSE did not reopen until 1990. What makes the Shanghai exchange unique is that the stocks it chooses to list have either ‘A’ shares, which are traded using the local Yuan currency, as well as ‘B’ shares that are targeted towards foreign investors and valued in USD. The SSE’s status as a non-profit organization has not held it back this year, as it has risen over 19% YTD.

– founded in the great year of 1866, the Shanghai Stock Exchange (SSE) makes its mark by being the largest stock exchange in China by market capitalization. Similar to the temporary closing of the TSE, the Shanghai Stock Exchange was suspended in 1949 due to the Chinese Revolution. This closing ended up reshaping the exchange, as the modern version of the SSE did not reopen until 1990. What makes the Shanghai exchange unique is that the stocks it chooses to list have either ‘A’ shares, which are traded using the local Yuan currency, as well as ‘B’ shares that are targeted towards foreign investors and valued in USD. The SSE’s status as a non-profit organization has not held it back this year, as it has risen over 19% YTD. Hong Kong (Hong Kong) – shifting over to the other crucial geographical area of the Chinese economy, the Hong Kong Stock Exchange comes in as the fifth-largest stock exchange by market cap, touting over 2,300 listed companies. The Hong Kong Stock Exchange is distinctive in that about half of its listed companies are based on mainland China. This fact comes despite the overall region currently vying for continued separation from mainland China’s policies and regulation. In 2017, the stock exchange made major headlines when it decided to permanently close its physical trading floor and shift all of its efforts towards ramping up its electronic trading software. The Hong Kong Stock Exchange lists a few of China’s major corporations including AIA, Tencent Holdings, China Mobile, HSBC Holdings, and PetroChina. Founded in 1891, the stock exchange is still producing substantial returns, including being up over 12% YTD.

– shifting over to the other crucial geographical area of the Chinese economy, the Hong Kong Stock Exchange comes in as the fifth-largest stock exchange by market cap, touting over 2,300 listed companies. The Hong Kong Stock Exchange is distinctive in that about half of its listed companies are based on mainland China. This fact comes despite the overall region currently vying for continued separation from mainland China’s policies and regulation. In 2017, the stock exchange made major headlines when it decided to permanently close its physical trading floor and shift all of its efforts towards ramping up its electronic trading software. The Hong Kong Stock Exchange lists a few of China’s major corporations including AIA, Tencent Holdings, China Mobile, HSBC Holdings, and PetroChina. Founded in 1891, the stock exchange is still producing substantial returns, including being up over 12% YTD. Euronext (Eurozone) – Euronext is the primary stock exchange used in European countries not named the UK. Primarily, they have a strong presence in France, Belgium, Ireland, and Portugal, while also maintaining their headquarters in the Netherlands’ famous city of Amsterdam. As stocks listed at Euronext trade solely in euros, the Euronext plays a critical role with European investors. Despite it being only the sixth-largest stock exchange in the world, it has had the best year of any of the top 10, with a YTD gain of over 32%. As many economists predict a slowdown in European growth moving forward, it will be intriguing to see whether the Eurozone can sustain its incredible performance so far this year.

– Euronext is the primary stock exchange used in European countries not named the UK. Primarily, they have a strong presence in France, Belgium, Ireland, and Portugal, while also maintaining their headquarters in the Netherlands’ famous city of Amsterdam. As stocks listed at Euronext trade solely in euros, the Euronext plays a critical role with European investors. Despite it being only the sixth-largest stock exchange in the world, it has had the best year of any of the top 10, with a YTD gain of over 32%. As many economists predict a slowdown in European growth moving forward, it will be intriguing to see whether the Eurozone can sustain its incredible performance so far this year. London (UK) – founded in 1698, the London Stock Exchange (LSE) claims the title as the oldest and longest-running stock exchange out of the top 10 largest worldwide exchanges. The London Stock Exchange is owned and operated by the London Stock Exchange Group, an organization that came about following the merger of the LSE with Borsa Italiana in 2007. The LSE carried the title of the world’s largest stock exchange until the completion of the First World War when the achievement was taken over by the NYSE. The LSE lists major global entities including British Petroleum, GlaxoSmithKline, and Barclays and its benchmark index, the FTSE 100, has risen almost 12% YTD.

– founded in 1698, the London Stock Exchange (LSE) claims the title as the oldest and longest-running stock exchange out of the top 10 largest worldwide exchanges. The London Stock Exchange is owned and operated by the London Stock Exchange Group, an organization that came about following the merger of the LSE with Borsa Italiana in 2007. The LSE carried the title of the world’s largest stock exchange until the completion of the First World War when the achievement was taken over by the NYSE. The LSE lists major global entities including British Petroleum, GlaxoSmithKline, and Barclays and its benchmark index, the FTSE 100, has risen almost 12% YTD. Shenzhen (China) – the Shenzhen Stock Exchange (SZSE), officially created in 1990, comes in as the eighth largest worldwide stock exchange with a market capitalization of $2.50 trillion. The Shenzhen Stock Exchange is notable due to its status as one of only two independently operating stock exchanges in China, with the larger Shanghai Stock Exchange being the other. Shares traded at the exchange do so in Yuan, as a majority of the companies listed are also based in China. Similar to the USA’s NASDAQ, the SZSE, back in 2009, instituted a ChiNext board of high-growth, high-tech startups. Initially seen as a potential shot in the dark, the growth-focused board has started to gain serious support from investors across the globe. The SZSE has exceeded expectations to start the year, despite the turmoil with China’s domestic economy as well as issues relating to the trade war, with the SZSE Component Index up over 26% YTD.

– the Shenzhen Stock Exchange (SZSE), officially created in 1990, comes in as the eighth largest worldwide stock exchange with a market capitalization of $2.50 trillion. The Shenzhen Stock Exchange is notable due to its status as one of only two independently operating stock exchanges in China, with the larger Shanghai Stock Exchange being the other. Shares traded at the exchange do so in Yuan, as a majority of the companies listed are also based in China. Similar to the USA’s NASDAQ, the SZSE, back in 2009, instituted a ChiNext board of high-growth, high-tech startups. Initially seen as a potential shot in the dark, the growth-focused board has started to gain serious support from investors across the globe. The SZSE has exceeded expectations to start the year, despite the turmoil with China’s domestic economy as well as issues relating to the trade war, with the SZSE Component Index up over 26% YTD. Toronto (Canada) – initially founded in 1852, the Toronto Stock Exchange (TSX) claims the position of the ninth-largest stock exchange by market cap, coming in at a total of $2.1 trillion. Owned and operated by TMX Group, the stock exchange lists all of Canada’s ‘Big Five’ commercial banks, which includes the Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), and the Canadian Imperial Bank of Commerce (CIBC). In 2011, the TMX Group was in the news for attempts to merge with the London Stock Exchange, yet neither side could get shareholders’ approval and the merger attempts were abandoned within months. The TSX has had a steadily positive first half of 2019, with the S&P/TSX Composite Index claiming over 15% gains YTD.

– initially founded in 1852, the Toronto Stock Exchange (TSX) claims the position of the ninth-largest stock exchange by market cap, coming in at a total of $2.1 trillion. Owned and operated by TMX Group, the stock exchange lists all of Canada’s ‘Big Five’ commercial banks, which includes the Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), and the Canadian Imperial Bank of Commerce (CIBC). In 2011, the TMX Group was in the news for attempts to merge with the London Stock Exchange, yet neither side could get shareholders’ approval and the merger attempts were abandoned within months. The TSX has had a steadily positive first half of 2019, with the S&P/TSX Composite Index claiming over 15% gains YTD. Bombay (India) – despite coming in with the highest number of companies listed – currently at 5,461 organizations – the Bombay Stock Exchange (BSE) arrives as the tenth largest stock exchange in the world, with a market cap of around $2.05 trillion. The large number of companies listed can be misleading though, as many of them are small-cap firms. Although it is currently the fifth-largest stock exchange in Asia, the BSE was actually the first stock exchange in the continent when it was established in 1875. The BSE is located on Dalal Street in Mumbai, India and is up a measly 7% YTD.

Future Wealth Projections by Country Shows Continued Momentum for Asian Markets





(Data source: Global Wealth Migration Review)



Private wealth projections recently released by the Global Wealth Migration Review signal a continued rise for Asian countries, namely China, Japan, and India. As seen in the charts above, China and India are projected to have the greatest growth in the world’s share of private wealth over the next 10 years, rising 120% and 180% respectively from their 2018 numbers. Notably, India is expected to surpass the United Kingdom as well as Germany in terms of private wealth held by individuals. Both countries currently hold more wealth than India, based on 2018 numbers shown below, yet both European powerhouses are also only expected to grow their private wealth by a paltry 10% over the next decade. China, which already holds the second-largest global private wealth share with an astounding $23.6 trillion, is expected to close the gap with the current leader, the US, by $16.1 trillion due to substantial population growth and aggressive fiscal stimulus. If these numbers hold true, it would not be a surprise to see stock exchanges such as Shanghai (China), Hong Kong (Hong Kong), Shenzhen (China), and Bombay (India) race up the charts. On the flip side, the projections look dim for European stock exchanges such as Euronext and the London Stock Exchange, both of which could see their name fall quickly to the bottom half of the top 10 or, in an extreme case, off the list completely. One name to keep an eye out for as a new entry to the top 10 would be the Australia Securities Exchange, the largest stock exchange in the country. As a nation, Australia is anticipated to see an 80% growth in private wealth over the next 10 years, thus leading to a rise from the 8th largest private wealth share in 2018 all the way up to #5 by 2028. In respect to the US, they are projected to hold their lead, albeit in a much lighter fashion, as the champion of the world’s private wealth. Thus, it will be difficult for any stock exchange to overcome the market capitalization of the New York Stock Exchange or even the NASDAQ, which currently almost doubles the market cap of the third-largest stock exchange (Tokyo Stock Exchange).



(Data source: Global Wealth Migration Review)



Past I Know First Predictions for Stock Exchange Indices



I Know First has had prior success predicting each stock exchange discussed above. Using varying time horizons, spanning from 3 days to 1 month all the way out to 1 year, I Know First has had forecasting success at each level. To take a look at our former success predicting stock exchange indices, we present the chart below and use the corresponding links to view the respective forecasts.



Stock Exchange \\ Return

3 to 7 days 7 to 14 days 1 Month 3 Months NASDAQ (USA) 0.66% 2.37% 2.76% 4.17% Tokyo (Japan) 3.12% 27.1% Shanghai (China) 0.25% 1.82% 0.34% Hong Kong (Hong Kong) 3.86% 3.69% 27.1% Euronext (Eurozone) 0.77% London (UK) 2.1% 3.8% Shenzhen (China) 11.07% 14.93% Toronto (Canada) 4.2% 52.9% Bombay (India) 1.01% 2.11% 1.14%

As shown in the table above, we have had varying success depending on the stock exchange index and time horizon predicted. Primarily, our strong success in longer-term predictions, specifically 1- or 3-month time horizons, of the Asian stock exchanges of Shanghai, Hong Kong, and Shenzhen connect well with their strong performances throughout the years. The accurate predictions also bode well when looking at the expected future growth of the countries’ private wealth share. We have also had success predicting Nasdaq related indices at every time horizon, thus showing our increasing ability to forecast US equity markets, in this case consisting of high-growth technology stocks. Finally, our consistent performance for London Stock Exchange as well as the Bombay Stock Exchange indices shows our accurate predictions extend into tougher to gauge exchanges and markets.

Conclusion

The top 10 stock exchanges form a drastically different list than what appeared a decade ago and the order will continue to be substantially adjusted as we enter the next decade. The private wealth share projections support the claim that many Asian stock exchanges will climb up the top half of the rankings, while many European related exchanges will fall to the bottom half, or off the list completely. Our forecasting returns for the various top 10 stock exchange indices align with the performance of each stock exchange throughout our years covering world indices, particularly with respect to their performances YTD.



On a similar note, we have also updated our coverage of world indices to include 37 new assets, increasing the total number of world indices covered to 110.



Please note – for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.