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FTSE Debuts New IPO Index
FTSE announced in May that it and its partner IPO research firm Renaissance Capital had created a series of Asia Pacific IPO indexes that exclude Japan. The Asia Pacific region has so far seen the launch of roughly 69 percent of the IPOs to debut in 2010, FTSE said.
The two new indexes include a broad index that covers the entire Asia Pacific ex-Japan region and a narrower index that focuses on IPOs originating in Hong Kong and China.
The broad FTSE Renaissance Asia Pacific ex Japan IPO Index covers all IPOs in the region with free float of more than $100 million, and encompasses individual country indexes for each of its component markets: Australia, Hong Kong, China, India, Indonesia, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand.
The FTSE Renaissance Hong Kong/China Top IPO Index covers the largest IPOs from Hong Kong’s market—many of them are companies that operate or are domiciled in mainland China.
FTSE took over the calculation of Renaissance’s original U.S. IPO indexes in April 2009, after which the index family was renamed the FTSE Renaissance IPO Index Series.
MSCI May Add Micro-Caps
In early May, MSCI said that it was beginning one of its consultations, in which it solicits input from the investment community on its proposed index changes.
This time the consultation raises the possibility of expanding the coverage of MSCI’s developed market and frontier market indexes: The developed markets equity universe would see the addition of micro-cap stocks, while the frontier markets indexes would be expanded to include more small-cap stocks.
Should the proposed changes be implemented as presented in the consultation paper, MSCI would calculate broad market indexes for the developed markets that would encompass the large-, mid-, small- and micro-cap segments that would be available alongside the existing broad market indexes.
The frontier markets index series currently only covers the small-cap segment of certain select markets in the Middle East, in addition to the large- and mid-cap segments of each frontier market. The consultation paper suggests standardizing small-cap coverage throughout MSCI’s frontier markets indexes.
MSCI has posted the consultation paper on its Web site and has said that it would announce any resulting changes to the rules and construction of its indexes by June 30.
Bosnia-Herzegovina Joins DJI FEAS Series
In late March, Dow Jones Indexes announced the addition of Bosnia-Herzegovina to its Dow Jones FEAS index universe.
The Dow Jones FEAS indexes cover companies in countries included in the Federation of Euro-Asian Stock Exchanges. Currently, the DJ FEAS benchmarks include a composite index and two subindexes that cover the Middle East/Caucasus region and southeastern Europe. With the inclusion of Bosnia-Herzegovina, 11 of FEAS’ 29 member states are covered in the composite index, including the major exchanges of the United Arab Emirates, Jordan, Serbia, Turkey, Pakistan, Bahrain, Oman, the Republic of Macedonia, Bulgaria and Croatia.
Bosnia-Herzegovina is included in the subindex for southeastern Europe, along with five other countries.
DJI Adds To RBP Family
In early May, Dow Jones Indexes unveiled four new indexes to be included in its existing family of Required Business Performance indexes. The index family uses a methodology that incorporates a scoring system devised by Transparent Value LLC, a subsidiary of Guggenheim Partners, to determine if a company is likely to perform at a level that justifies its stock price.
The new indexes include the Dow Jones RBP U.S. Large-Cap Aggressive Index, the Dow Jones RBP U.S. Large-Cap Defensive Index, the Dow Jones RBP U.S. Large-Cap Market Index and the Dow Jones U.S. Large-Cap Total Stock Market Index (RBP weighted).
The first three are directional strategy indexes. They are subsets of the Dow Jones U.S. Large-Cap Total Stock Market Index that are designed to reflect aggressive, defensive and neutral market views as determined by the beta factors and momentum of their component stocks. Components are weighted by their RBP probabilities, which reflect in part estimates of each company’s ability to meet or beat earnings targets.
Meanwhile, the fourth index covers the 750 components of the DJ U.S. Large-Cap Total Stock Market Index. It weights those components by their RBP probabilities rather than free-float market capitalization.
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