LSX Index
As if you are an investor in the capital market, you may know and familiar with the stock index value that used by the market as a tool to reflect every stock's price movement in the market. On the other hand, we believe that many of you may not have an insight knowledge on index value and the meaning of it and how to calculate an index value as well as not knowing how to use that information as a tool to analyze the market before making investment decision or analyze the chance of investment with critical analysis in term of benefit from stock index value. Moreover, this information is considered as a crucial instrument that investor must know and understand so as to use it as a reference for an investment decision making with a better aspect.
Definition of Index
Stock price index is an instrument that use as an indicator to reflex the overview of the listed company’s price movement in the stock market and the movement of securities market.
LSX Index
LSX Index is a composite index which represents the price movement for all common stock trading on the LSX by calculating from the prices of all common stocks.
Index Calculation methodology
LSX index is composite market capitalization weighted price index which compares the current market value of all listed common stocks with its market value on the base date of 11 January 2011, which was the day when LSX index was first established and the original index was set at 1000 points.
Formula:

Market Capitalization Weighted Index=(Current Market Capitalization) / (Base Market Capitalization) x base index

- Current Market Capitalization: Refer to the total market cap of the listed stock based on the current market price.
- Base Market Capitalization: Refer to the total market cap of the listed stock based on the base price (Due to each stock listed in different date that lead to the different date in the base date).
- Base index will change according to the share’s quantity due to the situation such as: right offering and public offering, change preferred shares to common shares so as to avoid an impact from the volatility of index.
- Base index is being set based on each securities market which some market set as 100 points and
- Based index is 1000 points which are set based on each securities market.

Market capitalization for each constituent is equal to the total number of listed shares for each constituent multiplying stock price for each constituent to arrive at the total market value, Therefore, the key factors that will reflect to the price movements and the number of shares.
Thus, In the event of any increase or decrease in the current market value due to reasons other than fluctuations in stock market such as: new listing, delisting, right offering, capital increase or decrease and stock dividend, LSX will make necessary adjustments to the base market value in order to eliminate all effects other than price movements from the index.
The significant of stock price index
- Recognized as an indicator that reflex the movement or overall stock’s price movement of the company that listed in the securities market, which an investor can utilize as to evaluate the benefit and investment risk or reliable stock’s index.
- Stock index also known as an indicator that shown the return benefit from securities market, which investor can use index value as a performance benchmark so as to compared their own investment benefit with the overall stock index.
- Stock price index can be use as the indicator that help investor understand the market overview better with the ability to access to each stock’s information. On the other hand, investor able to utilize both current daily index movement and the history of index movement as well as the changed in price of any stock that listed in the market with a clear picture and can make investment decision based on this information which can be very useful for the investor’s investment
- Stock price index can be used as a tool to forecast the market trend and the stock price movement in the future which popular among those technical investors who use for their technical analysis.
- Nonetheless, index can also use as a reference to compared an index between securities market in term of the potential growth in stock price such as compared between the LSX index with Securities Exchange of Thailand (SET index). In the comparison we found that the calculation method uses in both markets is using the same methodology.
- Besides, index also can be used as reference in issue bond including exchange trade fund, derivatives, derivative warrant and mutual fund. Which can allow investors to choose from a wide variety of investments and give us a better position based on risk-management.

Therefore, the ability to understand the stock’s index value and the calculation methodology which will help an investor able to monitoring the movement of stock index’s value in a timely manner. As a result, investor able to estimate the momentum and predict the direction of the trend where the price of listed company in a better point of view.