S&P Dow Jones Indices has launched the S&P SMIT 40 Index, designed to measure the performance of 40 leading companies from four emerging markets: South Korea, Mexico, Indonesia and Turkey (SMITs).
The index has been licensed by UniCredit to serve as the basis for structured products, to be issued in Germany and Austria.
Marketed under the brand names “HypoVereinsbank onemarkets” in Germany and “UniCredit onemarkets” in Austria, the structured products will be listed on the Frankfurt and Stuttgart Stock Exchanges.
The S&P SMIT 40 Index represents the four largest markets of the Next Eleven (N-11). The N-11, a concept developed by Goldman Sachs Asset Management (GSAM), are the 11 countries (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam) recognised by GSAM as having the potential for strong long-term growth (in addition to the BRIC countries). The index is designed to be representative of these four equity markets yet be efficient to replicate in order to support financial products.
Michael Orzano (pictured), associate director of global equity indices at S&P Dow Jones Indices, says: “Investors’ interest in emerging market investments is beginning to mature, and they are looking for new ways to tap into this asset class. Interest in the BRICs has, to a certain extent, tapered off recently as their economic growth has cooled and stock markets have underperformed. In the meantime, interest in the SMIT countries appears to be continuing to grow across Europe and in the States.”
The S&P SMIT 40 Index employs a transparent, rules-based methodology. To be eligible for inclusion, stocks must have a float-adjusted market capitalization above USD1bn and three-month average daily value traded above USD5m. The largest ten eligible stocks in each country based on float-adjusted market capitalisation are included in the index, and the four countries are equally-weighted to enhance geographic diversification.
