How to Read Market Data
You may have seen key numbers being posted in the newspaper or on television - sometimes they can even appear on the screens of your office elevator - without fully understanding what these numbers are and why anyone would care about them.
The answer is that those numbers provide clues about how the markets are performing each day, which in turn can give an informed observer insight into how those with “skin in the game” (people who have money to lose by being wrong) think about the current and future prospects of an economy.
We include five recurring indicators in The Mekong Memo - the Thailand, Vietnam, Myanmar, Cambodia, and Laos indexes, as well as the gold price in each of USD and the relevant local currency.
Read on to understand what each of these numbers are, how they work, and why they matter:
Stock Exchange of Thailand Index (SET)
What it is: The stock exchange of Thailand (SET), is ASEAN’s third largest exchange behind Singapore and Indonesia.
How it works: The SET Index is a Thai composite stock market index calculated by the prices of all common stocks (including unit trusts of property funds) on the main board of the Stock Exchange of Thailand, except for stocks which have been suspended for more than one year. It is a market capitalization-weighted price index, which compares the current market value of all listed common shares with its value on the base date of April 30, 1975, when the Index was established and set at 100 points.
Why it matters: SET index is the oldest and the most cited equity index in Thailand, can be a useful barometer of how the economy of Thailand is performing, and what market participants believe future prospects are for Thai businesses.
Vietnam Ho Chi Minh Stock Index (VNINDEX)
What it is: The main stock market index in Vietnam.
How it works: The Ho Chi Minh VSE tracks the performance of 303 equities listed on the Ho Chi Min and Hanoi Stock Exchanges. It is a capitalization-weighted index. The VN-Index has a base value of 100 as of July 28, 2000.
Why it matters: The Ho Chi Minh index is the oldest and the most cited equity index in Vietnam, can be a useful barometer of how the economy of Vietnam is performing, and what market participants believe future prospects are for Vietnamese businesses.
Myanmar Stock Price Index (MYANPIX)
What it is: The main stock market index in Myanmar.
How it works: There are currently only 7 companies Listed on the Stock Exchange, and trading is thin. Market capitalization-weighted index Constituents are all the ordinary stocks listed on the YSX. Base date: 25th March 2016 Base point: 1,000.
Why it matters: Frankly, for the time being the market is not active or broad enough to provide a depth of sentiment that is widely useful to investors or businesspeople. We have decided to include it as a barometer only, and hope that as the market matures and brings more participants into the economy the data will become more reliable and useful.
Cambodia Securities Exchange Index (CSX)
What it is: Cambodia Securities Index, the main stock market indicator in Cambodia.
How it works: Base Date: April 18, 2012. Base Value: 1,000 points. Market Capitalization Weighted Index.
Why it matters: The CSX Index can be a useful barometer of how the economy of Cambodia is performing, and what market participants believe future prospects are for Cambodian businesses.
Lao Securities Exchange Composite Index (LSX)
What it is: Laos composite index.
How it works: Base date: January 11, 2011. Base Value: 1000. Composed of 11 stocks. Market Capitalization Weighted Index.
Why it matters: The LSX Index can be a useful barometer of how the economy of Laos is performing, and what market participants believe future prospects are for Lao businesses.
What it is: With its use as a commodity for thousands of years, gold has the most durable record of staying power of any indicator on this list. Usually when global investors talk about gold prices, they’re referring to the US dollar price per troy ounce (approximately 31.1035 grams) of 99.99% pure gold bullion (gold bars). The Mekong Memo shows this global price in addition to local prices.
How it works: Gold is priced in US dollars per troy ounce around the world. Usually this gold is of 99.99% purity, also referred to as “four nines” purity. In local markets, however, the way that gold is bought, sold, and traded can differ in important ways.
In Thailand, for example, gold is traded in “baht” units (distinct from the currency, the Thai Baht, THB). One baht of weight is officially 15 grams, but when it comes to the gold trade it gets confusing. When trading gold bullion, a baht weight is 15.244 g (0.5377 oz). When buying and selling jewelry, however, a baht weight is equal to 15.16 g (0.535 oz). Further, a baht weight of jewelry in Thailand is not 99.99% pure gold. Due to its aesthetic appeal (Thai gold is notably a little more red than pure gold) and for durability as jewelry, a baht weight of Thai gold is only 99.5% pure gold. This is the price most often referred to in the Thai market and is the price quoted in The Mekong Memo: the THB value of one baht weight (15.16g) of jewelry-grade (99.5%) gold.
Why it matters: Some investors argue that in the 21st century gold is a relic. Other look to the yellow metal as a hedge agains uncertainty or as a safe-haven asset since physical gold has historically held its value and is a form of money without any counterparty risk. Gold is especially sought after in Southeast Asia due to a traditional mistrust of governments, banks, and other financial institutions.
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