The S&P MILA 40 gauges the returns of the largest and most liquid stocks trading on the MILA platform, an integrated trading venture formed by the Chile, Colombia and Peru stock exchanges.
S&P MILA 40 is a rules-based index that, according to the announcement, “aims to provide investors with an easily replicable, yet representative benchmark of these three markets, which represent the region’s 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. To be eligible, stocks must have a float-adjusted market capitalization above US $100 million as of the rebalancing reference date. All common, investable and preferred shares that are equity and not of a fixed income nature are eligible for inclusion, according to the announcement.
The Index uses a modified market capitalization-weighted scheme, utilizing the divisor methodology that is applied to all S&P equity indices. At rebalancing, constituent weights are adjusted so that no country can have a weight of more than 50% in the index and no single stock weight can be larger than 8%. S&P MILA 40 is rebalanced twice a year in March and September, according to a press release.
MILA is a market that emerged from the integration of trading platforms of Santiago Stock Exchange, Lima Stock Exchange and Colombia Stock Exchange. Additionally, the announcement notes that “for complete platform integration, and for ensuring smooth cross border clearing and settlement}, there is participation from the securities depositories – DCV from Chile, DECEVAL from Colombia and CAVALI from Peru. MILA was launched on May 30th, 2011 with secondary equity trading through an intermediate routing mechanism, and has plans to expand.
The agreement between MILA and S&P Indices, formally announced today at a signing ceremony in Santiago, Chile, will result in the development of additional, broad-market and sector indices intended to capture the performance of stocks offered in the three MILA countries.
"Equities from the Andean nations have been among the best performing stocks in all emerging markets," said Alka Banerjee, Vice President of Global Equity Indices at S&P Indices. "The S&P MILA 40 has been designed to provide local and international investors alike with a sound benchmark by which to judge and follow their investments in this important region of the world."
"This new Index is of great relevance to us because it will become a reference for MILA in the international markets," says Jose Antonio Martinez, CIO Bolsa de Comercio de Santiago.
"The launch of the S&P MILA 40 and our agreement with S&P Indices will allow the three Stock Exchanges representing MILA to have a broader international presence. The creation of this Index will highlight the performance of the Peruvian stocks, as well as Bolsa de Valores de Lima, and will attract international investments through potential structured products linked to the S&P MILA 40 and other indices that will be developed under this family," says Francis Stenning, General Manager BVL.
As of July 29, 2011, there are 22 companies from Chile, 12 from Colombia and 6 from Peru in the S&P MILA 40. Materials has the largest sector weighting in the Index at 25.4% followed by Financials at 25.2% and Utilities at 11.2%. The top 5 companies by index weight in the S&P MILA 40 are: Compania de Minas Buenaventura S.A.A. (Peru; 5.90%), Ecopetrol SA (Colombia; 5.73%), SACI Falabella (Chile; 5.36%), Empresas COPEC SA (Chile; 5.24%), and Pacific Rubiales Energy Corporation (Colombia; 5.17%).
More information on the S&P/MILA 40 is available at http://www.standardandpoors.com/indices.
More information on MILA is available at http://mercadointegrado.com/.