After hitting an all time high the FinanceAsia 100 gave up most of its gains for 2006, ending last week at 1,441 down from 1,466.
If you would like the chance to win a case of champagne, send an email to [email protected] predicting where the FinanceAsia 100 will finish 2006.
The FinanceAsia 100 index is reconstituted each October to reflect its mission to be the definitive Asian blue chip index - capturing the performance of the region's most profitable companies. Since its debut in September 2002, the FA100 index has served as a benchmark for some of non-Japan Asia's brightest corporate names. Benchmarked at 1,000 points at launch, FinanceAsia's blue chip index has experienced both lows and highs, dropping throughout the SARs era and soaring to new heights in the aftermath.
The reconstituted index
As in years past, non-Japan Asia's best performing companies like HSBC, Samsung Electronics and Singapore Telecom remain unassailable members of the index, while some of the region's lesser-known corporations are dropped at the expense of peer companies.
In September 2005 the FA100 was again recalibrated to include 20 new constituents to the blue chip index. This represents the index's largest reorganization since 2002 and further expanded on its geographical and sectoral diversity.
Compared to the 2004 constituents, the geographical make-up has taken on a more balanced appearance with the emerging economic powers of China and India playing a greater role. Out of the index's 100 stocks, Chinese-based corporations now account for 13%, with finance sector corporations China Merchants Bank and China Life Insurance and recently-listed telecommunication firm, Chine Netcom the new additions.
The five additions from the Indian corporate sphere pushed the total number of constituents from the nation up to 12. Joining the FA100 in 2005 are technology firm Tata Consulting Services, the State Bank of India (SBI), National Thermal Power Corporation and natural resource stocks Indian Oil and GAIL (India).
The 2005 reconstitution will also mark the first year that Hong Kong companies are not the geographic majority, with South Korean corporations topping the territory by a margin of 22 to 16. Also seeing its constituent numbers drop were the Malaysia, Singapore and Thailand representation. Numbers from both Taiwan and Indonesia remained steady.
From a sectoral point of view, the index added four natural resources companies. The weighting of transportation stocks was bolstered by two additions, while the technology component includes four new names.
The industrials segment of the FA100 evened out with two additions and two removals, while a similar scenario played out with the index's power sector components. In 2005 there was no consumer, conglomerate or real estate stocks added to the list, while the telecom sector included a lone new constituent.
Of the dropped stocks from the FA100, five finance corporations were removed, while the conglomerate and technology sectors also featured heavily with four and three dismissals respectively. The consumer, industrials and telecommunication sectors all lost two constituents, while one company from both of the real estate and power sectors were ousted.
In December FinanceAsia will publish "A Guide to Asia's Blue Chip Companies", which analyses the component stocks of the FinanceAsia 100. A copy of this will be available from Naveet Singh on [email protected] or call (852) 21225224.
What is the FinanceAsia 100?
FinanceAsia's blue chip index is reconstituted every year, based on our methodology of looking at the region's most profitable companies. The index was reconstituted at the beginning of October. The FinanceAsia 100 was launched in September 2002 and when launched we said that each year we would reconstitute the list. The list is designed to be a blue chip index of Asia's 100 most profitable companies based on an agggregate of three years profits. We arrived at the list last year by asking UBS to sort the region's companies based on three years of aggregate profit and this time we asked UBS to do the same exercise again.
Note: HSBC has been incorporated because it is a Hong Kong listed company. We have also incorporated the new financial sector financial holding companies from Taiwan.