According to Bloomberg, the biggest companies in the world by stock market value are five US tech companies. The Big Five– Apple, Alphabet, Microsoft, Amazon and Facebook– weigh in with a combined capitalization of more than 2 trillion dollars. Evidently, blue chip tech companies are not only dominating markets; they’re driving them.
Case in Point: Nasdaq vs. Kosdaq
The Nasdaq in particular is the preferred stock exchange for listing blue chip tech firms. The South Korean version of the exchange, called Kosdaq, is modeled off of the American Nasdaq, and as such, the two exchanges are similar in many ways.
Concerning performance, however, the Kosdaq continues to underperform when compared to its American counterpart.
One major difference between the two seemingly similar exchanges that could explain this discrepancy in performance is that while the Nasdaq includes the Big Five tech giants, the Kosdaq has failed to list any such tech firms.
Lack of Tech Firms = Exchange Underperforms
South Korea certainly has optimal candidates like Samsung that could be listed on the Kosdaq to bolster performance. Korean Blue Chip companies like Samsung Biologics Co., however, are opting to list on a separate exchange called the Kospi 200 instead of the Kosdaq.
Therefore, the difference in performance between the American Nasdaq and the Korean Kosdaq is due to presence or absence technology firms.
Driving the Fourth Industrial Revolution
What the Kosdaq proves is that stock exchanges that fail to include blue chip technology are doomed to underperform. More generally, the case demonstrates that tech firms are a major driving force in our economies, and are pioneering the technologies that are driving the Fourth Industrial Revolution. Investors understand that tech companies are on the forefront of a brave new world. To stay ahead financially and stay relevant period, long-term investments in blue chip tech firms are a smart decision.