July 18, 2002 -- Hong Kong -- Hong Kong Exchanges and Clearing Limited (HKEx), the publicly listed holding company of the Stock Exchange of Hong Kong which operates the tenth largest international stock market in the world in terms of market capitalization and the second largest in Asia, and Standard & Poor's, a global leader in financial information and investment analysis, have signed an agreement providing for the creation of a new series of equity indices covering stocks listed on HKEx's stock exchange, the two firms announced today.
A new index series will cover stocks selected from HKEx's Main Board. There will be three new Main Board indices: the S&P/HKEx 25, comprising 25 large-cap stocks and representing about 75% of the Main Board's market cap; the S&P/HKEx MidCap 25; and the S&P/HKEx SmallCap 50. S&P will also calculate a composite of these three indices called the S&P/HKEx Composite. In addition, a new S&P/HKEx index covering HKEx's GEM (Growth Enterprise Market) will be created. Standard & Poor's will handle index calculation and management and plans to disseminate real-time values of the indices in October.
Mr. K.C. Kwong, HKEx's Chief Executive said: "Introduction of the S&P/HKEx index series will provide investors with well-designed alternative benchmarks for devising their investment strategy. It will also facilitate the development of derivative products based on the new indices. Developing business partnerships like this one is an integral part of our strategy to improve our service to meet market needs, and to expand our business opportunities."
Mr. Harold McGraw III, Chairman and C.E.O of McGraw-Hill, the parent company of Standard & Poor's said: "Standard & Poor's Index Services is a world leader in creating and publishing indices that investors rely on to measure market performance and to manage their assets. We have been able to dramatically extend the scope of our indices by collaborating with leading exchanges around the world, and today we are very pleased to finalize our agreement with HKEx. The new S&P/HKEx index series recognizes the increasingly complementary nature of the economies of Hong Kong and the Mainland of China, and we believe investors throughout the world will embrace the new indices as the best representation of the region's equity market."
All shares listed on the exchange will be eligible for inclusion in the new index series, including those of Mainland companies. The basic criteria for a stock's inclusion in an S&P index are adequate float and liquidity; financial viability; market cap and economic sector representation. The indices will be free-float adjusted, and the sector breakdowns will be based on the Global Index Classification Standard (GICS). The S&P/HKEx indices will be calculated and maintained by an S&P Index Committee that will consult with Hong Kong market participants before finalizing and announcing the constituent stocks for the new index series. [For more information on GICS, please visit the website:www.spglobal.com/gics.html]
It is expected that the new S&P/HKEx index series will eventually replace HKEx's existing All Ordinaries Index (also known as AOI) and Growth Enterprise Index (also known as GEI). Standard & Poor's will seek to license financial products based on the indices including exchange-traded funds (also known as ETFs), index funds, futures, and options and will promote the indices as benchmarks for asset managers.
S&P Index Services to Open New Office in Hong Kong
Standard & Poor's will open an Index Services office in Hong Kong, complementing its existing financial information and credit rating operations in Hong Kong. Mr. David A. Collins of Standard & Poor's Japan will relocate to Hong Kong to become managing director of the company's index business in the Asia-Pacific region, effective 1 August 2002. This new Hong Kong office will serve as the regional headquarters for the Asia-Pacific Index Services business. Standard & Poor's maintains other Asia-Pacific Index Services offices in Tokyo and Sydney.
* * *
About Hong Kong Exchanges and Clearing Limited
Hong Kong Exchanges and Clearing Limited (HKEx) is the publicly listed holding company of the Hong Kong stock and futures exchanges and their related clearing houses. As of the end of June 2002, it has a market capitalization of US$1.7 billion. It is the authority for listing of securities in Hong Kong.
HKEx is second only to Tokyo Stock Exchange in Asia as an international stock exchange, in terms of market capitalization; and is tenth largest in the world.
HKEx operates a wholly electronic automatic order matching and execution trading system, and a linked electronic central clearing and settlement system. Settlement is on the second day following a transaction (T+2). Futures and options are also traded on a wholly electronic trading system and all transactions are guaranteed and cleared through a linked electronic system. For more information, please visit HKEx's website at www.hkex.com.hk.
About Standard & Poor's
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), provides independent financial information, analytical services and credit ratings to the world's financial markets. Among the company's many products are the S&P Global 1200 Index, the world's first real-time, investable global equity index, the S&P 500 Index, the premier U.S. portfolio index, and credit ratings on more than 220,000 securities and funds worldwide. With more than 5,000 employees located in 18 countries, Standard & Poor's is an integral part of the global financial infrastructure. For more information, please visit Standard & Poor's website at www.standardandpoors.com.