Dow Jones Indexes has launched the Dow Jones Africa Titans 50 Index, a pan-African index that measures the stock performance of 50 companies that are headquartered in or generate the major
Dow Jones Indexes has launched the Dow Jones Africa Titans 50 Index, a pan-African index that measures the stock performance of 50 companies that are headquartered in or generate the majority of their revenues in Africa.
The index offers either direct or indirect to the markets of Angola, Democratic Republic of the Congo, Egypt, Equatorial Guinea, Ghana, Kenya, Mali, Morocco, Nigeria, South Africa and Zambia.
The Dow Jones Africa Titans 50 Index has been licensed to Van Eck Global to serve as the basis for an exchange-traded fund, the first to use a pan-African index as its underlying basis. The Market Vectors Africa Index ETF will be launched on Monday, July 14 on the New York Stock Exchange.
‘The methodology behind the Dow Jones Africa Titans 50 Index provides a balanced reflection of the African markets,’ says Dow Jones Indexes president Michael A. Petronella. ‘It was important for us to develop an investible index that gives true exposure to the African region and is open to all African countries that qualify for it.’
Van Eck Global principal Jan van Eck adds: ‘One of the main advantages of the Dow Jones Africa Titans 50 Index is the fact that it also includes companies that are not headquartered or based in Africa, but generate more than 50 per cent of their revenue there. The investor has the chance to invest in a pan-African portfolio while participating in the high liquidity and performance of international securities.’
The index is weighted by float-adjusted market capitalisation. Each country’s weight is capped at 25 per cent, while individual components are capped at 8 per cent with a maximum of 15 companies per country. To be eligible for inclusion in the index, companies must have a minimum market capitalisation of USD200m and a minimum three-month average daily trading volume of USD1m.
South Africa, Egypt, Kenya, Nigeria, and Morocco currently represent the investible universe of the Dow Jones Africa Titans 50 Index, while Angola, Democratic Republic of the Congo, Equatorial Guinea, Ghana, Mali and Zambia are represented through offshore companies that generate revenues there. The three biggest sectors represented in the index are basic resources, banking, and oil and gas.
The index is calculated in US dollars and reviewed annually in June. Quarterly updates of float factors and shares are performed in which eligible IPO companies are added. Companies conducting IPOs must list one month in advance of the review to be eligible for consideration at the quarterly update.
Best known for the Dow Jones Industrial Average, Dow Jones Indexes is also co-owner of the Dow Jones Stoxx indices (it owns Stoxx in partnership with Deutsche Börse and Swiss Exchange) and together with Wilshire Associates it provides the Dow Jones Wilshire Global Index family, which is anchored by the Dow Jones Wilshire 5000 and covers more than 12,000 securities in 61 markets. Dow Jones Indexes also maintains various alternative indices, including measures of the hedge fund and commodity markets.
