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China Exchanges Services Company Limited (CESC) today (Monday) hosted a media conference and investment forum where it announced the key findings of its Report on Participation in Belt and Road Initiative by Listed Companies Tradable under Stock Connect (the Report) and the CES Belt and Road Index (CES OBOR), an index designed to reflect the stock price performance of listed companies actively participating in the Belt and Road Initiative.
The Belt and Road Initiative sees the "Five Principles of Peaceful Coexistence" as the main pillar to strengthen multilateral cooperation and exchange among countries along the Belt and Road routes. Based on the principles that can be measured quantitatively, Facilities Connectivity, Unimpeded Trade and Financial Integration, CESC developed the following six indicators to gauge companies’ participation in the Belt and Road Initiative: contracts, investment, sales, purchases, financing and insurance. With the support from three Stock Connect exchanges, CESC collected information of companies on the list of eligible securities for trading under Stock Connect (Stock Connect companies), aiming to understand their participation in the Belt and Road Initiative from 2014 to 2016. It received feedback from 1,286 companies.
The Report shows that the number of Stock Connect companies participating in the Belt and Road Initiative increased in all six indicators. Nearly two-thirds of the companies (65 per cent) said they will increase their business in the Belt and Road areas in coming three years. In addition, the data in the Report indicates that the Belt and Road Initiative participation of industries such as consumer staples, information technology and healthcare is in an upward. While they are active participants, the energy and infrastructure sectors are not as dominant as some analysts had expected. Overall, the Report reveals that the Belt and Road Initiative continues to develop and is attracting enterprises from many different sectors.
Based on the data compiled for the Report and its findings from the data, CESC selected a basket of companies to become the constituents of the CES OBOR with a view towards providing an objective, reliable and tradeable index to serve as the benchmark of the investment on Belt and Road Initiative.
The CES OBOR is currently the only index with constituent selection based on actual Belt and Road Initiative data from listed companies’ participation. It is comprised of the most representative companies from each indicator, which helps make the index representative by ensuring that all industries that benefit from the Belt and road Initiative and innovative companies can be included.
The CES OBOR’s constituents are all stocks eligible for Southbound or Northbound trading under Stock Connect, and they are equally weighted. The index is based on stock prices in Renminbi and is available daily after the close of the market. An overview of the CES OBOR and the constituent list are available in Appendix 1 and 2. Further details can be found from the index methodology.
“The index methodology of the CESC OBOR is closely linked with the development strategy of Mainland China. CESC will review the constituent list annually to ensure the index continues to be a good indicator. We believe the CES OBOR can assist investors to capturing the investment opportunities brought by the Belt and Road Initiative in a comprehensive and timely way,” said CESC Chief Executive Mao Zhirong.
After the media conference, CESC hosted a Belt and Road Investment Forum, an event that connected experts with good knowledge of the Belt and Road Initiative and leaders within the investment community so they could share views on the influence of the Belt and Road Initiatives on China’s economic development and capital markets. Hong Kong Trade Development Council Director of Research Nicholas Kwan delivered a speech on the influence of the Belt and Road Initiative on China’s economic development. The forum also included a lively roundtable discussion of the economic impact of the Belt and Road Initiative. The panellists of the roundtable discussion included China Merchants Asset Management (Hong Kong) Co, Ltd General Manager Bai Haifeng, E Fund Management (HK) Co, Ltd Chief Executive Huang Gaohui, Value Partners Limited Quantitative Investment Solutions Co-Managing Director David Quah and China Silk Road iValley Research Institute Chairman and Chief Economist Professor Liang Haiming. CESC Director and Deputy Chief Executive Jason Du was the moderator of the discussion.
