WASHINGTON, D.C., August 3, 1998 --- The International Finance Corporation today announced two changes to the components of the IFC Investable (IFCI) index, which measures returns on stocks that are available to foreign investors; and the Global (IFCG) index, which is designed as the broadest indicator of market movements, showing the performance of the most active stocks in their respective stock markets even if they are unavailable to foreign investors:
Indexes to include Hong Kong "red chips"
On November 2, 1998, IFC will add Hong Kong "red chips" to its Investable and Global Index series for China. "Red chips" are commonly defined as those stocks that are listed on the Stock Exchange of Hong Kong and incorporated in the Hong Kong Special Administrative Region (HKSAR), but are owned (directly or indirectly) in significant proportions by the Chinese government or a Chinese state-owned enterprise. At least 35 percent of the share holdings of "red chips" in the Hang Seng China Affiliated Corporations (Red Chip) Index are held by state-owned organizations or provincial or municipal authorities in China. At the end of June, there were 43 Hang Seng "red chips" with a total market capitalization of approximately US$15 billion.
Currently, the IFC China Indexes include three classes of shares (A-, B-, and H-classes), of which only the B-shares and H-shares are investable by foreigners and included in the IFCI Index. B-shares, listed either on the Shanghai or Shenzhen stock exchanges, represented 58 percent of the IFCI market capitalization on June 30, 1998. H-shares represented the remaining 42 percent of the IFCI China on June 30. H-shares, like "red chips", are listed at the HKSE, but are incorporated in the mainland and approved for listing by the Chinese Securities Regulatory Commission authorities (CSRC). H-shares do not have large government holdings.
Portuguese equities to be removed from Indexes
On April 1, 1999, IFC will discontinue the IFCI and IFCG Index series for Portugal and also remove Portugal from all regional and composite IFCI and IFCG Indexes. The decision to remove Portugal from the index series is based on the country’s entry into the European Monetary Union. Portugal is the first country to be selected for "graduation" from IFC’s emerging markets indexes.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
