Sep 19 2008
Eleven SA companies in Deutsche Börse index
I was (again) reminded of the importance of the “SA economy in Europe” recently, when the Deutsche Börse (DB) unveiled – what it described as – a new market indicator for emerging Africa. It is known as the DAXGlobal Africa Index. I think of it as the “SA economy in Europe index”.
In a 26-page document explaining the index, the stock exchange said “50 of the most liquid and biggest companies in Africa” were represented in the index, giving investors “unique access to investable emerging Africa”.
What I found most interesting, was the country weightings. The rocket scientists at the DB decided to limit individual country weightings to 15%, meaning no country may weigh more than 15%. To make it a little more complicated, they created a new country in Africa, which they called “offshore”. It also got a ceiling of 15%.
Offshore companies are companies “out of Africa”, listed elsewhere, generating at least 50% of their income in Africa. So, now South Africa could, theoretically, have a 30% weighting (15% for companies listed in SA and 15% for offshore companies).
In fact, the index kicked off in July with seven SA companies and four “offshore SA companies”, with a combined weighting of 24.78% (14.52% and 10.26% respectively). The DB will review the company composition of the index once a year, with the first revision in September 2009.
Then it’ll be interesting to see whether the offshore team pulled closer to the onshore team.
The four offshore companies in the index are Investec, Old Mutual, Randgold Resources and Aquarius Platinum. The onshore seven are Anglo Platinum, Sasol, MTN, Telkom, Firstrand, Impala Platinum and Standard Bank.
With company weightings of 4.07% and 4.52% respectively, Old Mutual and MTN are among the “Top 10″ biggest companies represented in the index.
* Here another nice summary of what it’s about.
