We can make a comparison among these three capital markets based on:
- Number of listed company
- Number of investors (volume of trading)
- Composite index
- Market capitalization
- Types of products
Listed companies
Listed companies are firms whose shares are listed (quoted) on a stock exchange for public trading. Also called quoted company.
Number of listed companies is one of main indicators that used to measure capital market attractiveness.
The higher number of listed companies is better because it means that the investors will have more company to be selected as the firm where the investors will invest their money. So, the capital market will be more attractive to the investors.
This is the comparison:
| Capital Market | Companies that listed |
| Tokyo Stock Exchange (TSE) | 2,370 companies |
| Indonesia Stock Exchange (IDX) | 396 companies |
| London Stock Exchange (LSE) | 3,008 companies |
Volume of trading
Trading volume, sometimes simply referred to as volume, refers to the number of shares or contracts of a security traded during a defined time period. Most commonly, trading volume is measured daily, but depending on the security that is being traded, volume may be measured on longer timelines such as a week or a month. When investors or financial analysts see a large increase in volume, it may indicate a significant change in the price of security. Significant losses and earnings will generally lead to movement in the trading volume for that stock. High transaction volume is also indicate that the attractiveness of capital market.
Market index
Market index is an index which is designed to measure price changes of an overall market, such as the stock market or the bond market.
A market index (for instance the FTSE100 index) gives an indication of the share price of the constituents of the relevant index. Hence the FTSE100 index reflects the share price of the 100 top UK companies that comprise the index. If the share prices of the constituent companies rise, so will the index and if they fall the index will fall.
Below is the capital market index for last 5 years:
| Capital Market | December, 31 2005 | December, 31 2006 | December, 31 2007 | December, 31 2008 | December, 31 2009 |
| Indonesia (JKSE) | 1,171.71 | 1,805.52 | 2,745.83 | 1,355.41 | 1272.78 |
| Japan (NIKKEI) | 16,111.43 | 17,225.83 | 15,307.78 | 8,859.56 | 10,546.44 |
| UK (FTSE100) | 5,618.80 | 6,220.80 | 6,456.90 | 4,434.20 | 5412.9 |
From market index, we can also calculate/expect the risk, return, and covariance for each market. We can use statistic tool to calculate the risk, return, and covariance (here I use Microsoft excel 2007 and the past 5 years data of capital market index).
Below is the result:
| Market index | Risk (standard deviation) | Market Return |
| JKSE | 0,0388809 | 109,6730% |
| NIKKEI | 0,0335082 | 6,5584% |
| FTSE | 0,029189 | 21,9004% |
From the result we can see that the performance of Indonesia capital market is the best among those three capital market. The risk is not too different but the market return in Indonesia capital market is much higher than if we invest in Japan or UK capital market. The investor should be interested to invest their money in Indonesia capital market.
Market Capitalization of Listed Companies
Market capitalization represents the aggregate value of a company or stock. It is obtained by multiplying the number of shares outstanding by their current price per share.
Market capitalization is one of the basic measures of a publicly-traded company; it is a way of determining the rough value of a company. Generally speaking, a higher market capitalization indicates a more valuable company. Many exchanges and indices are weighted for market capitalization. It is informally known as market cap.
| Country name | Market capitalization (in millions US $ ) | ||||
| 2004 | 2005 | 2006 | 2007 | 2008 | |
| Indonesia | $73,250.64 | $81,428.12 | $138,886 | $211,693 | $98,760.6 |
| Japan | $3,678,260 | $4,736,510 | $4,726,270 | $4,453,470 | $3,220,490 |
| United Kingdom | $2,815,930 | $3,058,180 | $3,794,310 | $3,858,510 | $1,851,950 |
Data are in current U.S. dollars. Source: Standard & Poor’s, Emerging Stock Markets Factbook and supplemental S&P data.
Types of product traded
Indonesia Stock exchange products:
Equities, Bond, Derivatives, Mutual Funds, Syariah Product
Tokyo Stock Exchange products:
Bonds, Convertible bonds, ETFs, REITs, Futures & Options, Carbon Market(Emissions Trading), TOKYO AIM
London Stock Exchange products:
Equity markets – enables companies from around the world to raise capital. There are four primary markets; Main Market, Alternative Investment Market (AIM), Professional Securities Market (PSM) and Specialist Fund Market (SFM).
Trading services – highly active market for trading in a range of securities, including UK and international equities, debt, covered warrants, exchange traded funds (ETFs), Exchange Traded Commodities (ETCs), reits, fixed interest, contracts for difference (CFDs) and depositary receipts.
Derivatives – A major contributor to derivatives business is EDX London, created in 2003 to bring the cash equity and derivatives markets closer together.
