Nasdaq Global Select Market Composite

Definition

The Nasdaq Global Select Market Composite is a market capitalization-weighted index of the largest and most actively traded companies listed on the Nasdaq Stock Market. It represents a subset of the broader Nasdaq Composite Index, focusing on companies that meet stringent financial and liquidity requirements. As a result, the index provides a benchmark for monitoring the performance of leading global technology and growth-oriented companies.

Phonetic

The phonetic pronunciation of “Nasdaq Global Select Market Composite” is: /ˈnæzdæk ˈɡloʊbəl sɪˈlɛkt ˈmɑrkɪt kəmˈpɑzɪt/

Key Takeaways

The Nasdaq Global Select Market Composite is a market capitalization-weighted index, which means the stocks with higher market capitalization have a greater influence on the index’s movement.
It is comprised of over 1,200 U.S. and international companies that meet stringent financial and liquidity requirements, ensuring that only companies with strong fundamentals are included in the index.
With a high-level focus on technology and innovation, this index offers investors exposure to some of the most impactful and fast-growing sectors in the global economy.

Importance

The Nasdaq Global Select Market Composite is an important business/finance term because it represents a benchmark index comprising the highest-tier stocks traded on the Nasdaq Stock Market. These stocks have to meet stringent financial, liquidity, and corporate governance requirements, making them some of the most valuable, stable, and well-regarded companies in the market. Investors and analysts monitor this composite to gauge the overall performance of top-tier companies, identify market trends, and make informed investment decisions. The Nasdaq Global Select Market Composite’s importance can also be attributed to its role in reflecting the growth and success of technology-focused and innovative companies, which are predominately listed on the Nasdaq exchange.

Explanation

The Nasdaq Global Select Market Composite serves as an essential tool in the financial landscape by providing investors and market participants with valuable information regarding the performance and trends of leading and innovative companies listed on Nasdaq. Comprising a diverse mix of high-performance organizations from various sectors such as technology, finance, and healthcare, among others, the composite acts as a benchmark for market analysts and investors to gauge the general health and development of the industries represented. Essentially, this composite offers a snapshot of global market insights, ultimately assisting investors in making informed decisions while diversifying their portfolios. Furthermore, the Nasdaq Global Select Market Composite is used by asset managers and investment funds to track the performance of their investments against the market, as well as to create exchange-traded funds (ETFs) and other investment products that aim to replicate or outperform the composite. To ensure the composite reflects the upper echelon of listed companies, Nasdaq enforces stringent financial, governance, and liquidity requirements. The composite not only enables investors to identify potential investment targets but also creates a competitive environment for companies aspiring to be a part of it. By serving as a sought-after benchmark, the Nasdaq Global Select Market Composite encourages innovative companies to excel and strive for higher standards, ultimately contributing to the overall growth and development of the global market.

Examples

The Nasdaq Global Select Market Composite is an index of companies with strict listing requirements, such as rigorous financial and liquidity standards. Here are three real-world examples: 1. Apple Inc. (AAPL): Apple is a technology giant and one of the largest companies listed on the Nasdaq Global Select Market. The company designs, manufactures, and markets mobile communication devices, media devices, computers, and other electronic products. Apple’s high financial and liquidity standards allow it to be a part of the Nasdaq Global Select Market Composite. 2. Amazon.com Inc. (AMZN): Amazon is a leading global e-commerce and cloud computing company that’s part of the Nasdaq Global Select Market Composite. The company operates various business segments, including Amazon Web Services, Prime, Amazon Music, and AmazonFresh. Amazon’s strong financial performance and liquidity make it an ideal candidate for inclusion in the index. 3. Tesla Inc. (TSLA): Tesla is an electric vehicle and clean energy company that manufactures electric vehicles, battery energy storage, and solar energy products. Tesla’s financial strengths and liquidity allow it to meet the strict requirements of the Nasdaq Global Select Market Composite, making it a part of the index.

Frequently Asked Questions(FAQ)

What is the Nasdaq Global Select Market Composite?

The Nasdaq Global Select Market Composite is a market capitalization-weighted index that tracks the performance of the largest and most actively traded companies listed on the Nasdaq Global Select Market tier. This tier represents the top segment of companies listed on the Nasdaq Stock Exchange based on their financial performance, liquidity, and corporate governance standards.

How is the Nasdaq Global Select Market Composite calculated?

The index is calculated using a market capitalization-weighted methodology, which means that each company’s weight in the index is determined by the market value of its outstanding shares. This ensures that larger companies with higher market caps have a more significant impact on the index’s overall performance.

What are the criteria for a company to be listed on the Nasdaq Global Select Market Composite?

To be eligible for listing on the Nasdaq Global Select Market Composite, a company must meet specific requirements, such as a minimum market capitalization, minimum public float, minimum bid price, and specific financial performance thresholds. In addition, the company must meet strict corporate governance standards, including having a majority-independent board of directors and independent audit committees.

How often are constituents of the Nasdaq Global Select Market Composite reviewed and rebalanced?

The Nasdaq Global Select Market Composite is reviewed on an annual basis, usually in December, during the Nasdaq Index annual reconstitution process. The review process may result in new companies being added, and existing constituents being removed based on the eligibility criteria.

How can I invest in the Nasdaq Global Select Market Composite?

You cannot invest directly in the Nasdaq Global Select Market Composite index. However, you can invest in exchange-traded funds (ETFs) or other financial products that track the performance of the index. These investment vehicles aim to replicate the index’s performance by holding a portfolio of the companies that make up the index.Q; How does the Nasdaq Global Select Market Composite differ from other Nasdaq indices?

Can foreign companies be listed on the Nasdaq Global Select Market Composite?

Yes, foreign companies can be listed on the Nasdaq Global Select Market Composite as long as they meet the necessary listing requirements and financial performance, liquidity, and corporate governance standards.

Related Finance Terms

Stock Exchange
Market Capitalization
Listing Requirements
Electronic Trading Platform
Securities

Table of Contents