International Markets

Introduction to Stocks

Trading around the clock, tracking international markets, the global indexes, international investing are all described in simple and understandable terms.

Trading around the clock - Stock trading goes on around the world, around the clock, in an electronic global marketplace. Stock trading goes on nearly 24 hours a day, on dozens of different exchanges on different continents in different time zones.

As the trading ends in one city, activity shifts to a market in another city, sweeping the changes in price around the world. The opening prices in Tokyo and Sydney are influenced by the closing prices in the U.S., and vice-versa.

The global market explains why a stock can end trading one day at a specific price and open the next day at a different price. What's still evolving is the extent to which the markets are interrelated. One reason is the growing number of multinational companies that trade on several exchanges. Another reason is the increasing tendency for investors to buy in many markets, not just their own.

Tracking international markets - As investors buy more global stocks, they want to know more about how those markets are doing. Global markets are increasingly open to all investors.
Electronic media provides up-to-the-minute reports on what's happening around the world. Thus, investors' apetites are being met with a steady stream of information.

The global indexes - The Dow Jones Global Indexes (DJGI) are barometers of stock market performance around the world. The DJGI let you track the performance of almost three dozens global equity markets over the most recent 12-month period.

Each country's index is computed in local currency and in four global currencies: U.S. dollars, British pounds, Japanese yen, and euros. Each equity index, all the regional indexes and the overall World Stock Index are all capitalization weighted. That means that the stocks with the largest capitalizations, figured by multiplying the number of shares times the current price per share, have greater influence on an individual index than shares with less capitalization.

International investing - In the new economy, investors looking for ways to diversify their portfolio have a world of opportunity. If you want to balance some of the risks of investing in the U.S. stocks, you can diversify your portfolio by putting some of your money into equities available on overseas markets.

Buy stocks abroad can produce rich results. There are several ways for a U.S. investor to buy international stocks:

* Big U.S. brokerage firms with branch offices abroad can buy stocks directly
* Some international and multinational companies list their stocks directly on U.S. exchanges
* Multiple mutual fund firms offer international funds that invest overseas
* The stocks of some of the largest companies is sold as American Depository Receipts
  (ADRs) on U.S. exchanges.

Although trading information on ADRs, like Glaxo or Mitsubishi, is reported in U.S. stock tables, The ADRs are certificates representing a set number of shares held in trust for the investor by a bank. The bank converts the dividends it receives into dollars and takes care of withholding taxes, plus other paperwork. It's the method of choice for many investors.