Dow Jones has released a new index listing the largest and most liquid stocks in Japan, Australia an...
Dow Jones has released a new index listing the largest and most liquid stocks in Japan, Australia and Hong Kong.
The index is the first of a series, called the Dow Jones Asia Pacific Extra Liquid Series (AP/ELS), designed with the help of the Sydney Futures Exchange. It is for use by both institutional and retail investors who want index-linked investments in the Asia Pacific region. Factors such as liquidity, turnover, tracking error and transaction costs are taken into account in an effort to make the index deliver a competitive performance.
Adrian Tupper, senior quantitative analyst for HSBC, approves of the attempt to track liquidity. He said: "In the Asia Pacific area you can find that even in the best industries you still can't get hold of the stock. You don't have to go too deep in Japan before you hit liquidity problems and countries like Thailand, Malaysia and the Philippines are represented by a small number of liquid stocks.
Any index that tries to take liquidity into account is onto a good thing
Dow Jones predicts the first products available based on the 35-stock Australia, 30-stock Hong Kong and 100-stock Japan index will include warrants, equity-linked notes and mutual funds.
Michael Petronella, managing director of Dow Jones Indexes, said he plans to increase the number of AP/ELS country and regional indices over the next year.
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