If asked to list as many Stock Exchanges as possible in thirty seconds, I bet many would struggle after naming five. I personally would start with the two major US Exchanges, the Nasdaq and the New York Stock Exchange (NYSE). The next three would be made up of the London Stock Exchange (LSE), The Tokyo Stock Exchange (TYO), and The Toronto Stock Exchange (TSE). At least, these are the Exchanges that first come to my mind. If I’m quick enough, I may be able to blurt out The Hong Kong Stock Exchange (HKG), The Shanghai Stock Exchange (SSE), and the Australian Securities Exchange (ASX).
The exchanges listed above are reasonably popular and represent only a fraction of the Exchanges that can be used to trade Stocks and other Equities. We will be doing a disservice to our investing journey if we limit ourselves to only the most popular Exchanges.
Let us tackle this issue of diversity with a list of some of the lesser-known Stock Exchanges and explore some of the opportunities that can be found away from the most common finance Meccas.
The Tadawul (TADAWUL) is the only licensed Stock Exchange in Saudi Arabia, the largest Stock Exchange in the Middle East, and the twelfth largest in the world by market capitalisation. According to Statista, The aggregate market cap of the 200 companies listed on The Tadawul is approximately US $2.6 trillion (July of 2021).
Contributing to an outsized portion of The Tadawul’s market capitalisation is Saudi Aramco (TADAWUL: 2222), the fourth-largest company in the world (market cap as of Sept 2021, US ~$1.9 trillion). Perhaps unsurprisingly, a vast swath of the listings on The Tadawul are companies concerned with crude oil and chemical products. Saudi Basic Industries (TADAWUL: 2010) is the Exchange’s second-largest listing, with a comparatively modest market capitalisation of US $99 billion.
Financial institutions and banking groups help to diversify the offerings of the Stock Exchange. The Exchange’s former largest listings, Al Rajhi Banking & Investment (TADAWUL: 1120) and Saudi National Bank (TADAWUL: 1180 ), are currently the third and fourth largest with market caps between US $70 and US $80 billion.
The Tadawul All Share Index (TASI), which tracks the performance of all stock listed on The Tadawul, has recorded a 30.34% increase since the beginning of 2021.
However, the TASI is sitting at a peak level, which appears to be a repetition of the previous boom and bust cycle. The TASI was in a comparable position in late 2014 and late 2007, before wiping out more than half its value over the proceeding months. If past performance is any indicator, the TASI might be overdue a correction.
In the world of Exchanges, the New Zealand's Exchange (NZX) is a relative minnow. The 180 companies listed on the NZX have a combined market cap of US $280 billion (or NZ $403 billion).
But it might be foolish to discount the NZX due to its size. The NZX is one of the best performing Stock Exchanges globally, with the NZX 50 Index exceeding returns from the NYSE Composite over 10 years.
The largest companies on the NZX are Australian owned banks Westpac Banking (NZX: WBC) and Australia and New Zealand Banking (NZX: ANZ), with market caps of US $68.0 billion (NZ$ 97.0 billion) and US $57.5 billion (NZ $82.0 billion), respectively. Yet, the most significant contributor to the NZX performance in the past ten years is A2 Milk Company (NZX: ATM), growing 3,000% since September 2011. Followed by Ryman Healthcare (NZX: RYM), increasing its share price by 480% in the same time period. More recently, the cancer diagnosis Company, Pacific Edge (NZX: PEB) has outshone all else, increasing in value by 1,100% since February 2020.
Korea Exchange (KRX), with a market cap of 2.33 Trillion, is the fourteenth largest Stock Exchange globally.
KRX hosts more than ten times the number of companies of the NZX or The Tadawul. Over 2000 companies comprise the KRX, with technology companies leading in terms of market cap. Samsung Electronics (KRX: 005930), SK Hynix (KRX: 000660), and Kakao (KRX: 035720) are the Exchange’s three largest listings. Two other Samsung companies help fill out the Exchange’s top-ten rankings. Samsung Biologics (KRX: 207940) and Samsung SDI (KRX: 006400).
The Index that tracks the KRX, the Korea Composite Stock Price Index (KOSPI), has performed admirably over the past ten years, up by 80% since September 2011. However, as a tech-rich economy, the growth in the Index could arguably be better. The KOSPI trails both the NZX and the NYSE Composite.