S&P launches emerging markets infrastructure index
16 Nov 2007
The S&P Emerging Markets Infrastructure Index provides diversified, liquid exposure to 30 of the largest publicly listed infrastructure stocks in developing Asia, Europe, the Middle East and Latin America.
The S&P Emerging Markets Infrastructure Index covers 10 countries at launch with an adjusted market capitalization of $103.28 billion. The index is dominated by companies from China (42.17 per cent weighting), Russia (12.14 per cent) and Brazil (11.55 per cent). The average market capitalisation of constituents is $3.4 billion
"Countries in the developing world have been growing at more than double the rate of mature economies in recent years and these high growth rates are likely to persist, with massive implications for infrastructure investment," says Srikant Dash, Head of Global Research & Design at Standard & Poor''s Index Services.
"A lack of investment in infrastructure is widely acknowledged to act as a brake on social and economic development, and these countries will need to continue to invest in vital projects to underwrite the next phase of their growth. For investors, infrastructure projects appeal due to their relatively predictable and stable cashflows that tend to grow in line with GDP."
To be eligible for inclusion in the S&P Emerging Markets Infrastructure Index, companies must have a total market capitalization of at least $300 million and a three-month average daily trading value of at least $1 million. They must trade on the local market exchange of Brazil, Chile, the Czech Republic, Egypt, Hungary, Indonesia, Israel, Malaysia, Mexico, Philippines, Poland, South Africa, South Korea, Taiwan, Thailand or Turkey.
Infrastructure firms listed on developed markets are also eligible for inclusion if the majority of their revenues are derived from emerging market operations.
The S&P Emerging Markets Infrastructure Index is the seventh index in the widely used S&P Global Thematic Index Series, which provides exposure to budding investment themes that cut across traditional industry definitions and geographic boundaries.