An Insight into the European Stock Markets

The European Union

The European Union (EU) is a political and economic union between 28 member states located primarily in Europe. The EU traces its history back to the European Coal and Steel Community formed after the end of World War II to “save what might be saved in the wreckage of Europe”. Since then, the EU has undergone significant growth and evolution, both in terms of membership and policy. Currently, the EU is at the core of global affairs and is a vital trading partner for many other economies. The EU is the world’s largest single market with a GDP of $17.1 trillion. EU member states account for 50% of the world’s total trade in goods and services. The EU has the world’s largest service sector, worth approximately $3.9 trillion, and is the leading investment destination in the world.

The Euro Stoxx 50

The Euro Stoxx 50 (Stoxx 50) is a capitalization-weighted index of 50 stocks representing the euro area. The Euro Stoxx 50, which originally comprised the 50 largest companies in Europe, was first published on November 5, 1998. The index is traded on the Frankfurt Stock Exchange. The Euro Stoxx 50 is a market capitalization-weighted index. The constituents are selected by the Index Committee of the Deutsche Börse based on several criteria, including Liquidity, Capitalization, Financial soundness, and Long-term development. The Stoxx 50 is a price-weighted index. The Euro Stoxx 50 is made up of 50 of the largest and most liquid stocks traded in the Eurozone. The index includes companies from a broad range of sectors, including financial services, energy and utility companies, industrial goods, and technology.

Spain

Spain is a country in Southern Europe with a coastline on the Mediterranean Sea. It is the most visited country in Europe. The Kingdom of Spain as it is officially known has an economy that ranks 12th in the world. It is a member of the G-20, a founding member of the United Nations, the OSCE, the Council of Europe, the EU, and the OECD. Spanish companies have global representation, like Mapfre, the largest insurer in Latin America, and Iberdrola, a major utility company in the US. The Spanish economy is quite diversified and largely service-oriented, and it is the world's 10th-largest economy. Its $1.2 trillion economy makes it the fifth-largest economy in the Eurozone.

Germany

Germany is a federal parliamentary republic in Western Europe. It is the most populous country in the EU with a population of 82 million. Berlin is the capital and largest city. The German economy is the largest in the EU and the fourth-largest economy in the world in terms of nominal gross domestic product. It is the second-largest economy in the world in terms of purchasing power parity. The country has a large and skilled labor force, a competitive edge in many advanced technologies, and a strong manufacturing sector. The German stock market is the largest and most liquid in Europe.

Switzerland

Switzerland is a federal republic in Central Europe. It is bordered by Italy to the south, France to the west, Austria and Liechtenstein to the east, and Germany to the north. The Swiss economy is the world’s 19th largest economy. The Swiss stock market is the third largest in Europe in terms of market capitalization. The Swiss are global champions in the fields of pharmaceuticals and biotechnology.

Netherlands

The Netherlands is a member of the EU with a global trading hub at Rotterdam, one of the largest ports in the world. The Dutch economy is the fifth-largest economy in the EU and the sixth-largest in the world. The country is a major exporter of food and fuel and is also a leading importer of raw materials. The economy is characterized by a relatively large service sector, high investment rates, and an ample degree of innovation. The stock market in Amsterdam is the eighth largest in Europe based on market capitalization.

Concluding remarks

The European Union is the world’s largest single market with a GDP of $17.1 trillion. European stocks have performed well in recent years and are worth consideration by all investors. The Euro Stoxx 50 is a capitalization-weighted index of 50 stocks representing the euro area. The other major European stock markets are the Spanish, German, Swiss, and Dutch stock markets. All of these markets have performed well in the face of significant challenges and are worth your investment dollars.