The ISEQ 20 is the key stock market index of the Irish Stock Exchange, now part of Euronext Dublin. It was established to reflect the performance of the 20 most prominent companies listed on the Irish market.

This index reliably represents the health of the stock market in Ireland and is weighted by market capitalization. This means that companies with a larger market capitalization exert a more significant influence on the index.

Most of the companies included in the ISEQ 20 offer dividends, including well-known names such as CRH plc, Ryanair Holdings, Bank of Ireland, among others.

How is the ISEQ 20 value calculated?

To determine the daily value of the ISEQ 20 stock index, a mathematical formula is used that takes into account the market capitalization of the companies that comprise it:

ISEQ 20(t) = ISEQ 20(t - 1) × Σ Capi(t) / [ Σ Capi(t - 1) ± J ]

An adjustment coefficient J is used to compensate for the impact of specific financial events, such as capital issues or dividends, on the index valuation.

The value of the ISEQ 20 on a given day is obtained by multiplying the value of the ISEQ 20 on the previous day (day t-1) by a ratio calculated from the sum of the market capitalizations of the 20 companies on day t, divided by the sum of the capitalizations on day t-1.

In case you are not familiar with it, the daily capitalization of a specific company is obtained by multiplying the number of shares by the listed value of that company on that day.

For example, if the ISEQ 20 closes today at 1,371 points and the total capitalization of the 20 companies today is 50 billion euros, and tomorrow that capitalization increases to 50.5 billion euros, the closing value of the ISEQ 20 tomorrow would be:

ISEQ 20 (specific day) = 1,371 × 50.5/50 = 1,378.35 basis points.