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S&P launches first investable index for frontier equity markets

Analysis

Standard & Poor’s, the world’s leading index provider, has announced the launch of the S&P Select Frontier Index, the first investable index covering a broad range of frontier equity markets across Emerging Europe, Asia, South America and the Middle East.

The S&P Select Frontier Index is comprised of 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. Alka Banerjee, Vice President, Standard & Poor’s Index Services, said, “Liquidity 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. Less correlated to global economic cycles than their more developed counterparts, the combination of accelerating economic growth, increased government focus on privatizations and heightened IPO activity provides an attractive investment environment for those seeking alpha and diversification benefits”.

At launch, the S&P Select Frontier Index includes companies from Bulgaria, Cambodia, Colombia, Jordan, Kazakhstan, Pakistan, Panama, United Arab Emirates and Vietnam. The biggest country weightings include Pakistan (28.97%), UAE (23.12%), Jordan (13.23%), Vietnam (11.54%) and Panama (7.74%), while the top three constituents are MCB Bank (Pakistan), Emaar Properties (UAE) and Copa Holdings (Panama). To 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 6 months. (gowealthy.com)

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