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- BET Total Return index to be launched in September 2014
- BET Plus index to be launched in June 2014
- Increased visibility and information flow for BET member companies as of January 2015
- Representiveness of free-float factor in BET index family indices as of June 2014
In order to ensure that its indices are better representing the market and are more relevant, in line with the best practices in the industry, BVB decided upon a series of restructuring of the existing BET family indices and the creation of new ones. Thus, the revised indices will have a higher degree of investability, recommended to be used by asset management industry and portfolio managers as underlying, benchmark or for hedging.
BET Total Return index (BET-TR) will comply with the selection criteria and calculation methodology applied for BET and it will also take into account the dividends of the index member companies. BET-TR will provide investors with more information and would encourage companies to promote a stable dividend policy. The index will illustrate the attractiveness of the local capital market, accounting not only for the capital gains, but the total return of its constituents. Starting with September 2014, BET-TR will offer investors a complete picture for the overall performance of its member companies.
The second index to be launched this year is BET Plus index. BET Plus will replace the BET-C index at the quarterly index adjustment of June 2014. At the same date, BET-C index will stop being calculated. The aim of BET Plus is to track the performance of blue chips (which are included in BET) and of the stocks ranking below BET constituents in terms of liquidity. In order to make it more investible, two minimum criteria are considered, namely a minimum value of free float (EUR 1 mn, a free float factor will be considered for calculation) and a minimum level of liquidity (liquidity coefficient min. 0.0002). The similarities with BET will provide the user of the two indices with the possibility of pinning the underlying cause of the market trend to either blue chips or the rest of the listed shares.
To increase the interest of foreign investors in Romanian capital market, BET member companies need to gradually report in English and provide a minimum level of IR oriented services. The criterion refers to the following requirements: reporting in English, IFRS reporting, disclosure through BVB website and/or other platform designated by BVB, phone conferences/analyst & investor meetings when quarterly results are released. To allow BET member companies enough time to adjust to this requirement, the implementation date for this measure is January 2015.
In addition to the above, compared to the existing methodology, with the index quarterly index adjustment of June 2014, will be changed the calculation of the free float, in the sense that will be excluded the holdings over 30% owned in index member companies by insurance companies, pension funds, mutual and investment funds. The change of the calculation methodology mentioned above target the following indices: BET, BET-XT, BET-NG and BET-BK, as well as the indices to be launched, BET-TR and BET Plus. Such rule addresses the issue of funds and other investors in the above-mentioned categories with significant holdings in companies in their portfolios, where they are active in management, control the decision making process and so on.
“An investable index is a tool that reflects the capital market movements accurately. If used correctly, it should lower fund industry costs for hedging and tracking the index. All these increase the market liquidity and visibility. It is part of our efforts to do that. It is a very small part of what the removal of the eight capital market barriers will do to increase investors’ interest and access into the Romanian capital market” said Ludwik Sobolewski, BVB CEO.
