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Standard & Poor’s, the world’s leading index provider, today announced the launch of the S&P Overseas China 10 Index which will provide tradable exposure to 10 leading Chinese stocks available to foreign investors only through overseas listings.
The universe for the S&P Overseas China 10 Index includes any company domiciled in China that trades on a developed market exchange other than Hong Kong. ADRs and GDRs are eligible for inclusion in the index.
Foreign investors usually access Chinese equities through H-share based baskets and indices. H-shares are the shares of companies incorporated in Mainland China that are traded on the Hong Kong Stock Exchange. The new index includes 10 of the largest publicly-traded Chinese companies trading on developed market exchanges and not currently available through H-Shares. It will be used by structured products providers to create investable products.
Steven Goldin, Vice President, Standard & Poor’s Index Services, said: “The new S&P Overseas China 10 Index fills a gap in the market by providing exposure to leading Chinese stocks which only trade in overseas exchanges. It serves as a compliment to H-share based indices by providing access to a number of headline companies and sectors largely not found in these indices. These sectors include information technology, alternative energy and healthcare.”
The ten companies in the index are Baidu.com, Ctrip.com, Focus Media Holding, JA Solar Holdings, New Oriental, Sina Corporation, Sohu.com, Suntech Power Holdings, Wuxi Pharmatech and Yingli Green Energy Holdings. One and three year returns, at 31 May 2008, for the S&P Overseas China 10 Index were 45.6% per annum and 28.69% per annum respectively.
Each eligible stock must have a three-month average daily trading value US$ 1 million as of each rebalancing reference date. The index is rebalanced semi-annually and constituent weights are driven by liquidity.
The new index is a companion to S&P’s wide-ranging series of China-based indices. These include the S&P/CITIC indices, which mainly provide coverage of A-Shares issued in China by domestically listed firms for Chinese investors, and the S&P QDII indices, which enable Chinese institutional investors to invest in the overseas capital markets.
