Deutsche Börse has launched the DAXglobal Water Index to track the world’s largest and most liquid companies from the water industry.
Deutsche Börse has launched the DAXglobal Water Index to track the world’s largest and most liquid companies from the water industry. The German stock market group and index provider has also launched seven short indices enabling investors to hedge against falling prices in emerging markets.
The DAXglobal Water Index contains companies from the water supply, irrigation and sewage disposal sectors that are traded on international stock exchanges. Each company represented in the index must generate at least 30 percent of its income from these sectors.
The water index currently comprises 26 companies, of which the three largest are Spain’s Aguas Barcelona, Veolia Environnement from France and UTD Utilities from the UK.
UK stocks make up the largest proportion of the index with 33 per cent, followed by the US (13 per cent), Malaysia (11 per cent), Spain and France (each 8 per cent) and Hong Kong (5 per cent). A historical back-calculation of the index’s performance indicates a return of 32 per cent for 2007 and 24 per cent for 2006.
The constituents of the DAXglobal Water Index are selected on the basis of market capitalisation and average daily exchange turnover over the previous six months. The index is calculated as a price and performance index in euros, US dollars and sterling; its composition is reviewed once a year, while rebalancing is undertaken quarterly.
Deutsche Börse has also launched seven new DAXglobal short indices, offering performance in inverse proportion to the return of the DAXglobal Asia, DAXglobal China, DAXglobal Emerging11, DAXglobal Russia, DAXglobal Russia+, DAXglobal BRIC and DBIX, which tracks Indian companies.
For example, if the DAXglobal China Index falls by 5 per cent, the DAXglobal China Short Index rises by 5 per cent, and vice versa. Investors anticipating a negative performance for a particular market can use the short indices to generate positive returns.
Deutsche Börse’s Market Data & Analytics business calculates and publishes more than 2,200 indices and also compiles, distributes, and markets independent capital market information such as price data, trading statistics and back office information for banks and other financial institutions.