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China Index with Global Standard Helps Attract More Overseas Investors
A complex of China index complying with global standard will contribute to a better understanding of the Chinese equity market and help bring more investment to the country, said Fredy Bush, CEO of FTSE/Xinhua Index Limited (FXI).
International investors are very interested in China's equity market and are looking forward to a measurement for the market that they feel comfortable and understand, said Bush in a recent interview with Xinhua.
She believed the FTSE/Xinhua China 25 Index, which was designed to represent the performance of the Chinese market open to international investors, will meet the demand of investors around the world.
In a step to promote the Chinese market index, the FTSE/Xinhua China 25 Index is scheduled to launch in New York Thursday, following its debut in Hong Kong on April 19 this year.
Denominated in the U.S. dollar, the index will be used for the creation of an Exchange Traded Fund (ETF) that is expected to list on the New York Stock Exchange in early 2002.
The FTSE/Xinhua China 25 Index is a capped, tradable index featuring the largest, most liquid Chinese equities available to international investors. It currently consists of 25 H shares and red chips listed in Hong Kong, and some of B shares will come to the index in the next review.
"China's market is so unique. It is impossible to have one index to represent the whole economy," said Bush. "Even for A share, it is very difficult to look at the 1,100 A shares and try to do one index that represent it accurately."
Besides FTSE/Xinhua China 25 Index, FXI will launch a series of A share and B share indices, including China A Large Cap, China A Mid Cap, China Benchmark, China Small Cap, and China Universe.
Bush told Xinhua that all the FTSE/Xinhua indices will be developed under the methodology generally recognized worldwide, using the expertise of FTSE, an independent company owned jointly by the Financial Times and the London Stock Exchange.
"Because our index is based on market capitalization, free float and classification system that is used for worldwide equity, exchanges worldwide want to have that index," she said.
She said FXI is under active conservation with some exchanges in Asia and Europe, and after the launch of the FTSE/Xinhua China 25 Index and the related products, such as ETF, in New York, the FXI is committed to do the same in Tokyo, Singapore and the United Kingdom.
Bush said the reason for FXI to do a series of indices and to create a whole family is to help China build the infrastructure, and the foundation for the financial market.
"China now looks like closer and closer to WTO. It is important that China's financial market comes up with the standards of the global financial community," she said. "Right now the indices don' t meet the standard."
FXI, a joint venture between FTSE and Xinhua Financial Network, a subsidiary of the Xinhua News Agency, will also provide international investors with financial news from the Xinhua News Agency and Shanghai Securities News.
Bush said education is now the major obstacle for international investors, and the key is to provide information for the people and the government to understand the market.
Right now, investors in New York and London don't know companies in China because of the insufficient market information. She said she believed the launch of the FTSE/Xinhua China 25 Index will help increase people's understanding about China.
"When the index is available, a list of the companies will be available as well," she said.
That is a straight way for investors to invest in Chinese companies, and that helps expand China market, she added.
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