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An equity index shows how a stock market or part of a stock market is performing. Like the prices of individual shares, indexes changes continually during trading hours.
The difference is that an index shows the movement of a pool of shares. It serves as an indicator of the overall trend – whether of all the stocks on the market or only those, for example, in a specific industry segment or geographic area.
Indexes thus help investors observe market movements and also give them a cost-effective way of constructing a portfolio to replicate those movements.
Gross Index (GI): This type of index tracks the gross return of the stocks it includes. In other words, it reflects not only changes in their prices, but also any dividends they pay (which are assumed to be reinvested). This is generally seen as a fuller measure of a market’s performance than a price index.
Price Index (PI): A true price return index only reflects changes in the prices of the stocks that the index includes, not taking dividends into account. But some price indexes, while ignoring ordinary cash dividends, do make adjustments for extraordinary dividends.
Capped Index (CAP): In a capped index, there is a limit to the weight of any single security. If a stock exceeds the upper limit, its weight in the index is reduced to that maximum limit.
The OMX Baltic Benchmark index (OMXBB – PI, GI, CAP) tracks the largest and most traded shares from all the industry sectors represented on the Nasdaq Baltic Market. Its composition is reviewed twice a year to ensure high investability and low transaction costs. Each included stock is weighted based on its free-float capitalization – the market value of shares considered available for trading.
The OMX Baltic 10 index (OMXB10 – PI, GI) is a tradable index of the 10 most actively traded stocks on the Nasdaq Baltic Market. The limited number and excellent liquidity of the stocks which it includes make this index well-suited to derivative financial instruments. Stocks are weighted based on their free-float capitalization (the market value of shares considered available for trading), with a maximum weight of 15% for any one stock. The composition of the index is reviewed twice a year.
The OMX Baltic All-Share index (OMXB – PI, GI) tracks all the stocks included on the Main and Secondary lists of the Baltic exchanges except for those companies where a single shareholder controls 90% or more of the outstanding shares. The purpose of the index is to show the current status and movements of stocks on the Nasdaq Baltic Market as a whole.
The local all-share indexes OMX Tallinn, OMX Riga and OMX Vilnius (GI) include all the stocks on the Main and Secondary lists of the respective market (Tallinn, Riga or Vilnius) except for those companies where a single shareholder controls 90% or more of the outstanding shares. Their purpose is to show the current status and movements of stocks on each local market.
Sector indexes (PI, GI) are also available at the Baltic level. Based on the FTSE Group’s Industry Classification Benchmark (ICB), each shows the trend in a specific industry and enables the comparison of companies in that industry. Indexes for each ICB industry and supersector are calculated in euros for the stocks on the Main and Secondary lists of the Nasdaq Baltic exchanges.
Rules for the Construction and Maintenance of the Nasdaq Baltic equity indexes.
Nasdaq undertakes periodic and daily maintenance of the indexes.
Details regarding special events, such as the twice yearly review of the compositions of the OMX Baltic Benchmark index and the OMX Baltic 10 tradable index and any adjustments made due to corporate actions, are published on the Global Index Watch.