Products September 29, 2011

S&P Builds Infrastructure Index

S&P Indices has launched the S&P Latin America Infrastructure Index.
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The S&P Latin America Infrastructure Index is designed to measure the largest and most liquid publicly-listed Latin American infrastructure companies that meet certain investability requirements. The launch of the S&P Latin America Infrastructure Index follows the introduction of the S&P MILA 40 earlier in the month. Together, S&P Indices says these are “providing investors in Latin America with a means of measuring the performance of leading companies in the region.”

Using companies’ business descriptions and “cluster” Global Industry Classification Standard (GICS) classification techniques, the S&P Latin America Infrastructure Index methodology identifies constituents belonging to the Energy, Transportation, Telecommunications, and Utilities clusters. It uses a modified market capitalization weighting scheme with constituent weights determined by size and no single constituent can have a weight of more than 8% in the Index.

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As of August 31, 2011, the top five companies by weight in the S&P Latin America Infrastructure Index represent 37.4% of the Index. The companies are:

  • America Movil SAB de CV L ADR (Telecommunications, Mexico),
  • Lan Airlines S.A. ADR (Transportation, Chile)
  • Empresa Nacional de Electricidad SA (Utilities, Chile)
  • CPFL Energia SA ADR (Utilities, Brazil)
  • Enersis SA ADR (Utilities, Chile).

Simultaneously, S&P Indices is offering risk control versions of the S&P Latin America Infrastructure Index, which the firm says allows investors to limit volatility by replacing equities with a cash component if volatility exceeds a specified level. The risk control versions will be for 10%, 12% 15%, and 18% volatility levels.

Diversions September 29, 2011

Don’t Worry, We’re in Good Hands…

Research from a Swiss university has found that bank traders are more prone to risky and manipulative behavior than diagnosed psychopaths.  
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With the world strapped into the roller-coaster ride known as the “stock market,” it would be comforting to know that our economy is being looked after by steady, reliable individuals.

Alas – this does not seem to be the case.

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According to a new study conducted by researchers at the University of St. Gallen in Switzerland, financial traders are more uncooperative than psychopaths and have a greater tendency for risk-taking.  In a game simulation as part of the research, a group of 28 traders cared more about beating the competition than bringing in the highest score.

“Traders go out of their way to destroy the competition, even if they don’t get any economic benefit as a result,” says Thomas Noll, who conducted the research. Speaking to German newspaper, Spiegel, Noll commented that they behaved as though their neighbor had the same car, “and they took after it with a baseball bat so they could look better themselves.”

Comforting thought…

“Naturally one can’t characterize the traders as deranged,” Noll told Spiegel. “But for example, they behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test.”

The research results have been picked up by several news outlets, still buzzing after one UBS trader lost the bank $2.3 billion USD and led to the resignation of its CEO (see “UBS CEO Resigns in Trading Fallout”).  

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