The world''s leading index provider Standard & Poor''s today announced the launch
of the S&P Select Frontier Index, the first ingestible index covering a broad
range of frontier equity markets across Emerging Europe, Asia, South America and
the Middle East.
S&P Select Frontier Index comprises 30 of the largest and most liquid companies
from countries with smaller economies or less developed capital markets than traditional
emerging markets, and as a result, have previously been excluded from most emerging
market benchmarks and investment funds.
Banerjee, vice president of Standard & Poor''s Index Services, says the S&P
Select Frontier Index is designed to meet the needs of increasingly sophisticated
investors seeking to create index-linked products for frontier markets, which
have the potential for similar or greater returns than other better known developed
and emerging markets.
S&P Select Frontier Index is a subset of the benchmark S&P Extended Frontier
has increased tremendously in frontier markets since 2001 as restrictions on foreign
investment have been relaxed and returns have outpaced both developed and emerging
markets over the last decade," Banerjee says. "Less correlated to global
economic cycles than their more developed counterparts, the combination of accelerating
economic growth, increased government focus on privatisations and heightened IPO
activity provides an attractive investment environment for those seeking alpha
and diversification benefits."
universe from which index candidates are drawn includes publicly listed companies
from 11 markets in the Standard & Poor''s Emerging Market Data Base (EMDB)
that are generally accessible to foreign investors but are excluded from the S&P/IFCI
Emerging Markets Index. At launch, the S&P Select Frontier Index includes
companies from Bulgaria, Cambodia, Colombia, Jordan, Kazakhstan, Pakistan, Panama,
United Arab Emirates and Vietnam.
biggest country weightings include:
" Pakistan: 28.97%
" Jordan: 13.23%
" Vietnam: 11.54% and
The top three constituents are MCB Bank in Pakistan, Emaar Properties
in the UAE and Copa Holdings in Panama.
be eligible for inclusion in the S&P Select Frontier index, a company must
have a minimum float-adjusted market capitalization of $100 million, a minimum
average daily value traded of $2 million and a minimum of 15 days traded over
the previous six months. Constituent weights are driven by liquidity and size.
& Poor''s also released today a white paper titled Frontier Markets: Investment
Rationale, Accessibility and Risks.