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STOXX launches emerging markets exposed index for Europe


STOXX Limited has launched the STOXX Europe 600 EM Exposed Index, which represents companies in the STOXX Europe 600 Index that derive a substantial part of their revenues from emerging markets countries.

The new index provides exposure to these growing markets through liquid securities.
The STOXX Europe 600 EM Exposed Index is designed to act both as a proper benchmark for actively managed funds, and as an underlying to exchange-traded funds and other investable products.
“With the launch of the STOXX Europe 600 EM Exposed Index we are applying our innovative EM exposed index concept to our flagship benchmark index,” says Hartmut Graf, chief executive officer, STOXX Limited. “The STOXX EM Exposed Indices offer market participants a new way to include Emerging Markets exposure in their portfolios, through an investment into highly liquid Developed Market companies.”
The index universe for the new index is the STOXX Europe 600 Index. It is determined how much of each company’s revenues is derived from non-developed markets. All companies’ geographic revenue splits are collected from their annual reports. To further assign the reported revenues to individual countries, STOXX in addition uses the publicly available United Nations Commodity Trade Statistics Database (UN Comtrade), which contains manufactured goods exports data on each country.
Should a company not report any of the required data, its exposure is approximated by a ratio of the exports from the country that the company is based in, to the sum of the country’s GDP and imports, which is then multiplied by the global EM exposure of that country. For companies that do not report sales in their home country, revenues in the home region outside of the home country are calculated by dividing the country’s exports to home region by the sum of the country’s GDP and imports. In order to only include companies in the STOXX Europe 600 EM Exposed Index which have a significant part of their revenues from non-developed markets, a final exposure threshold of 33 per cent is set. All companies with a final exposure score that is higher than this are selected as index components, and weighted by a combination of free-float adjusted market capitalization and the exposure factor.
The STOXX Europe 600 EM Exposed Index is calculated in price, net and gross return versions and available in Euro and US dollars. The index is reviewed annually in September, using the latest available data from annual reports and UN Comtrade and World Bank.

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