• Home
• About Us
• Contact Us
• FactSheets
• Foreign ADRs List
• Indices
• Stock Lists

FAQs

Stock Exchanges of the World and the Number of Listed Companies

Have you ever wondered how many stocks are listed in the major stock exchanges of the world?. I did and this post is the result of my research. My source for this piece is the “World Federation of Exchanges(WFE)“. It is an association of 56 regulated exchanges around the world.

Data used here is as of the end of November,2008. There a total of 46,678 stocks traded in the member exchanges. This count does not include investment funds. The following tables show the various exchanges and the number of domestic and foreign listings in them:

1.Americas

2.Asia-Pacific

3.Europe-Middle East-Africa

Source: World Federation of Exchanges(WFE)

Analysis:

• The exchange with the the lowest number listings - just 19 - is the Malta SE in the country of Malta in Europe. Though there may be exchanges in the world that may have fewer companies listed. But those exchanges are not listed here since they are not members of the World Federation of Exchanges.
• Luxemborg SE has the most foreign companies listed (87%) followed by Bermuda SE (69%).
• The Bombay Stock Exchange in India has the largest number of equities listed.
• While foreign companies represent 14% of the stocks listed in the New York Stock Exchange (NYSE Group), they accounted for $11.4 Trillion of the $27.1 Trillion market values as of Dec 31,2007.
• Just 1% of the listed companies in the Tokyo SE are non-Japanese companies.
• The tiny city state of Singapore has 458 listed companies but 40% of them are foreign companies.
• 22% of the listings in the London SE are non-British companies.
• The BME Spanish Exchanges in Spain has more than four times the number of listing in the Deutsche Borse.
• USA is the number one in terms of stocks listed. The three organized stock exchanges in the USA (NYSE, Amex and NASDAQ) have a total of 5,598 companies trading in them.The number two is Bombay SE in India and the third is The TSX group of Canada.
• A total of 859 foreign equities trade in the big 3 US exchanges.

Note:
Deutsche Börse : Excluding the market segment “Freiverkehr” (unofficial regulated market)
Lima SE : Includes 26 foreign companies with shares negotiated under a special modality
Korea Exchange : includes Kosdaq market data
OMX Nordic Exchange : OMX includes Copenhagen, Helsinki, Iceland, Stockholm, Tallinn, Riga and Vilnius Stock Exchanges
Singapore Exchange : Main Board & Sesdaq
TSX Group : includes companies listed on TSX Venture
Tehran SE : Some 90 companies have been relegated to the “Unofficial Board” which is a “Temporary Board”

Why should you invest in Foreign Stocks?

The answer to the title question is: For better returns and diversification purposes.

Simply put, in this age of globalisation it is almost a requirement to invest in foreign countries if ones to make above average returns. It does not mean putting 5 to 10% as most Americans do. it means allocating 30-40% of ones portfolio to foreign equities. An average investor in the US has less than 10% of his portfolio invested in foreign stocks.

Of course there are many risks to investing in foreign stocks.For a brief summary go to the SEC page on International Investing.

Today foreign companies are competing and growing rapidly when compared with US companies. For example, the market capitalization of all the stocks listed in the New York Stock Exchange (NYSE) is about $27.1 Trillion as of December 31,2007. Out of this, 421 foreign companies’ capitalization is $11.4 Trillion. This shows that foreign companies are increasingly becoming more powerful and important in the global market place. On a worldwide basis the US markets constitutes only 45% of the total market capitalization of all companies. In addition to the NYSE there are many more foreign stocks listed in the Amex,Nasdaq and the OTC markets.

In addition to the above reasons, investing in foreign stocks may provide higher returns than investing in US stocks.

The following table and chart compares the Total Return of MCSI EAFE against US Indices for a period of 25 years. The MCSI EAFE Index is the all Non-US major stock markets of the world including Australasia, Europe and the Far East.

Total Return - MCSI EAFE Vs. US Index

Chart: Total Return - MCSI EAFE Vs. US Index

As we see in the above table and chart, in the past 25 calendar years foreign stocks have outperformed US stocks in 15 years.

From the above data, we can also infer the following:

1. In the past 5 years (2003 to 2007), foreign stocks have returned far higher returns than US stocks for each year. The year by year return difference is as follows:

Years 2003 and 2004 - Foreign stocks returned 10% higher than US stocks
Year 2005 - Foreign equities’ return was 8% higher than US stocks
Year 2006 - International stocks returned 12% higher then US stocks
Year 2007 - Foreign stocks returned 6% higher then US stocks

While some portion of this higher returns is due to the dollar depreciation, the majority is due to foreign companies making higher profits than our domestic ones.

2. From 1995 to 1999 during the high tech craze, the US markets outpaced international markets.

So overall foreign stocks performed better in most of the past 25 years. As US economy struggles to recover it may be the right time for US investors to take a fresh look at foreign markets and invest according to their risk appetite.

Question:

What is you portfolio allocation for foreign stocks?. Do you think you need to re-allocate your portfolio now?. Which country/region is your favorite? Post your story on portfolio allocation in the comments section.