What is NASDAQ?
If stock market exchanges are rated according to market capitalization, the NASDAQ is the second-largest stock market exchange in the world. It is second only to the New York Stock Exchange. It has some of the largest tech corporations listed on the exchange including the likes of Apple, Tesla, Amazon, and Nvidia. It is an American Stock Exchange based in New York City. The Nasdaq trades between 9:30 am and 4:30 pm EST every day much like the New York Stock Exchange. Pre-market hour trading (4:00 am — 9:30 am) and aftermarket hour trading (4:00 pm — 8:00 pm) is also done on the NASDAQ.
History of NASDAQ
The NASDAQ belongs to NASDAQ Inc. and was founded in 1971 by FINRA or the Financial Industry Regulatory Authority, known formerly as the National Association of Securities Dealers (NASD). NASDAQ stands for The National Association of Securities Dealers Automated Quotations. The idea behind its formation was to make it the first electronic stock market exchange. From humble beginnings in providing quotes and not actual electronic trades, the NASDAQ has grown widely, leading the trail for electronic stock markets.
The NASDAQ was affected by what is now known as the Dotcom Bubble. Since it was the main stock market for US technology stocks, whenever an overvaluation of tech companies occurs, it could affect its performance. This is what happened around the early 2000s when excessive speculations lead to inflation in stock prices and the resultant peak lead to lower performance of the stocks. It is important as an investor not to depend on pure speculation. When doing so, especially with a high-risk appetite in search for stocks with great growth potential, the wise thing to do would be to diversify and secure your stocks.
Currently, the NASDAQ makes money by charging fees on corporate services rendered to investors, charging premiums on info services, market services, and offering a host of technology services.
InvestSika lets you invest in companies listed in NASDAQ easily from Africa using your mobile money and a few button clicks.
How Companies Get Listed on NASDAQ
To be listed on the stock market exchange, a company must fulfill several requirements. This includes being registered on the Securities and Exchange Commission of the United States (SEC), meeting minimum capital and shareholders, and having several broker market markers. It is therefore a very competitive exchange for companies to get into.
Companies listed on NASDAQ are categorized based on their market cap into distinct groups or tiers namely, the Global Select Market, the Global Market, and the Capital Market. This is in descending order of the market capitalization requirements for being listed. Thus, the Global Select Market includes large-cap stocks and corporations and have higher standards and requirements. That is where you are likely to find companies as Tesla and Apple listed.
Following this, the Global Market is made up of mid-cap stocks or corporations with less stringent corporate governance and liquidity standards impose whilst the Capital Market features stocks or corporations with much smaller market cap and with less strict requirements for listings.
What is the NASDAQ Composite?
It is the main stock index used by NASDAQ. It is the weighted average of the market capitalization of over 2,500 securities listed on the NASDAQ. This includes ETFs, all non-derivative stocks, preferred shares, and funds. It is one of the most globally accepted and used indexes. It includes the NASDAQ 100, which is made up of the top 100 non-financial stocks on the NASDAQ. Even though they are only a few, they are quite valuable, making up about 90% of the movement of the NASDAQ composite.
For any investor seeking to invest in the technology industry, the NASDAQ composite or stocks listed on NASDAQ, offer some of the most lucrative investment options. A good application of that knowledge could yield some good returns.
Wrapping up
InvestSika lets you buy shares of companies that are publicly listed on local and global stock markets like NYSE and NASDAQ easily using your mobile money in just three clicks. Join SikaTribe to learn more about financial freedom through investments.
