The companies plan to initiate development of two new indices: S&P/CITIC A-Shares 300, a broad benchmark index, and S&P/CITIC A-Shares 50, a tradeable and investable index comprised of the largest and most liquid stocks from the S&P/CITIC A-Shares 300. The broad market index will be designed as a benchmark for gauging the performance of China's A-shares universe, which currently contains over 1,200 stocks. The S&P/CITIC A-shares 50 will be designed to form the basis for index products and trading tools such as Exchange-Traded Funds (ETFs), mutual funds and derivatives products. The two indices will be launched in early 2004.
All A-share stocks listed on the Shanghai and Shenzhen stock exchanges are eligible for inclusion in the indices. The indices will be market cap-weighted and free float-adjusted and constituent issues will be classified according to the Global Industry Classification Standard (GICSÒ). GICSÒ classification will bring the benchmarks in line with globally accepted standards used by index providers and investors worldwide.
"Investors around the world rely on Standard & Poor's for independent, transparent and objective indices that provide reliable and investable measures of local, regional and global markets," said Robert Shakotko, managing director, Standard & Poor's Index Services. "We are pleased to join our indexing experience and best practices with CITICS' deep local knowledge to develop index tools that are designed to meet the needs of both passive and active domestic investors, and that bring Chinese equities in line with markets around the globe for international investors."
Glenn Doody, vice president, Standard & Poor's Index Services added, "This agreement with CITICS represents a strategic expansion of Standard & Poor's presence in Asia's indexing arena, complementing our activities in Japan, Australia and Hong Kong where we maintain leading indices in conjunction with the principal exchanges in each of those markets."
Wang Dongming, Chairman of CITIC Securities, commented, "CITICS and S&P are the leading brands in the indexing space for the domestic and international markets respectively.
Our cooperation will not only accelerate the creation and development of index products in China but will also speed up the internationalization process for the domestic equity market. For these reasons, the relationship between CITICS and Standard & Poor's will be a development that will be viewed very positively by both international and domestic investors."
CITICS's head of index, Dr. Xu, further expanded, "The aim of the S&P/CITIC index series is to provide domestic and international investors with a standard for gauging the Chinese equity market. We will enhance our existing indices according to international standards and will also develop new products to meet the needs of investors globally."
The S&P/CITIC indices will be maintained by an Index Committee comprised of representatives from both Standard & Poor's and CITICS. An advisory panel of leaders from the financial and investment community will be established during the first quarter of 2004 to provide a direct line of communication between the Index Committee and local index users and to ensure the indices' independence and accuracy.
Standard & Poor's and CITICS will seek partners to develop financial products based on the indices including exchange-traded funds (ETFs), index funds, futures, and options, and will promote the indices as benchmarks for asset managers both globally and domestically.
