S&P Indices launches S&P MILA 40 index in Andean region

By Toni Weeks

San Diego, Aug. 29 - S&P Indices has launched the S&P MILA 40 index, the first in a series of indexes designed to measure the performance of the Mercado Integrado Latino Americano platform, an integrated trading venture formed by the Chile, Colombia and Peru stock exchanges.

According to a press release, the agreement between MILA and S&P Indices will result in the development of additional broad-market and sector indexes intended to capture the performance of stocks offered in the three countries.

The rules-based S&P MILA 40 index aims to provide investors with a representative benchmark of the three markets, which represent the regions' most liquid and investable markets. The initial selection universe for the index includes all stocks that are domiciled in Chile, Colombia and Peru and trade on the MILA Stock Market as domestic stocks. Eligible stocks must have a float-adjusted market capitalization of more than $100 million as of the rebalancing reference date. All common, investable and preferred shares that are equity-based and not of a fixed-income nature are eligible for inclusion.

"Equities from the Andean nations have been among the best-performing stocks in all emerging markets," Alka Banerjee, vice president of global equity indices, said in the release.

The index uses a modified market capitalization-weighted scheme that utilizes the divisor methodology that is applied to all S&P equity indexes. Constituent weights are adjusted at rebalancing so that no country can have a weight of more than 50% of the index and no single stock can be weighted more than 8%. Rebalancing will occur every March and September.

As of July 29, 22 companies from Chile, 12 from Colombia and six from Peru comprise the index. The largest sector weighting is currently materials, with a weight of 25.4%, followed by financials at 25.2% and utilities at 11.2%. The top five companies by index weight are Peru's Compania de Minas Buenaventura SAA with a weight of 5.9%, Colombia's Ecopetrol SA with a weight of 5.73%, Chile's SACI Falabella with a weight of 5.36%, Chile's Empresas Copec SA with a weight of 5.24% and Colombia's Pacific Rubiales Energy Corp. with a weight of 5.17%.

"The creation of this index will highlight the performance of the Peruvian stocks as well as Bolsa de Valores de Lim and will attract international investments through potential structured products linked to the S&P MILA 40 and other indexes that will be developed under this family," Francis Stenning, BVL general manager, commented in the release.

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