STOXX, a leading European index provider, has expanded its product offering with the roll-out of 19 broad, size and blue-chip indices covering Emerging and Developed Markets, East Asia, and Africa.
Hartmut Graf, chief executive officer, STOXX.
The new indices are derived from the STOXX Emerging Markets Total Market, STOXX Developed Market Total Market, STOXX East Asia Total Market and STOXX Africa Total Market indices that were introduced earlier this year.
“With the expansion of our STOXX Emerging and Developed Markets Index offering, as well as the launch of new regional indices, we are broadening the coverage of the world’s markets with innovative and rules-based STOXX indices,” said Hartmut Graf, chief executive officer, STOXX Limited.
The roll-out builds on STOXX’s existing indices, which are licensed to over 400 companies around the world, and are used not only as underlyings for financial products such as exchange-traded funds (ETFs), futures and options, and structured products, but also for risk and performance measurement.
This latest launch includes the following broad fixed component indices: STOXX Africa 90, STOXX Developed Markets 2400, STOXX East Asia 1800, STOXX East Asia 1800 ex Japan, STOXX Emerging Markets 1500 and STOXX Emerging Markets 1500 ex BRIC indices.
The STOXX Developed Markets Total Market Large, STOXX Developed Markets Total Market Mid, STOXX Developed Markets Total Market Small, STOXX Emerging Markets Large 500, STOXX Emerging Markets Mid 500, STOXX Emerging Markets Small 500, STOXX Emerging Markets Total Market Large, STOXX Emerging Markets Total Market Mid and STOXX Emerging Markets Total Market Small indices are the corresponding size versions.
The following blue-chip indices were also introduced: STOXX Developed Markets 150, STOXX East Asia 80, STOXX Emerging Markets 50 and STOXX Emerging Markets 50 ex BRIC indices.
The STOXX Emerging and STOXX Developed Markets indices classify countries according to STOXX’s market classification. The STOXX East Asia indices cover the following countries: China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. The STOXX Africa 90 Index represents companies from 5 African countries: Egypt, Morocco, Nigeria, South Africa and Tunisia.
The broad and size indices follow STOXX’s standard methodology for these index types, and are weighted by free-float market capitalisation. The indices are reviewed quarterly, and available in price, gross and net return versions in euro and US dollar.
The new blue-chip indices follow a five-step selection process to ensure tradability and diversification. The STOXX Developed Markets 150, STOXX East Asia 80 and STOXX Emerging Markets 50 index are derived from the respective Total Market Index (TMI), while the STOXX Emerging Markets 50 ex BRIC Index is derived from the STOXX Emerging Markets 50 Index.
In a first step, all countries that weigh less than 2 percent at TMI level are excluded from the index universe. Then, the largest companies from each country are selected until a coverage of approximately 60 percent of the free-float market capitalisation of corresponding country is reached. This list is then filtered for companies’ average daily value traded (ADVT), which needs to be at least 1 million euro over the past 3 months. Countries that are after this process are represented via only one company, are removed from the index universe.
Countries’ weights in the respective index are capped at 20 percent, and single components’ weights are capped at 10 percent. In the STOXX Emerging Markets blue-chip indices, only 8 companies can be selected per country, while in the STOXX East Asia blue-chip indices the number is limited to 16. The blue-chip indices are all weighted by free-float market capitalisation. They are reviewed annually, and available in price, gross and net return versions in euro and US dollar.