S&P launches new index to measure 40 top companies in Arab region

By Ashley Montgomery

Kansas City, Kan., Dec. 5 - S&P Indices, in partnership with the Arab Federation of Exchanges, announced a new index named the S&P AFE 40.

The two agencies worked together to create an index that will monitor 40 companies from Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Tunisia and the United Arab Emirates.

"We are seeing a growing interest among investors in Arab equities as this market begins to mature," said Robert Shakotko, managing director at S&P, in a news release. "The Arab Spring and the liberalization of Arab countries seem to signal a new era of investment opportunities in the Arab world."

Using float-adjusted market capitalization, the agencies chose the largest 40 stocks listed on the AFE member exchanges for inclusion in the index. To qualify, each stock must have at least $50 million in value traded over a year's span. Additionally, the maximum number of constituents included from each country was set at 10 and the minimum at one.

The S&P AFE 40 weights the stocks using a capped market capitalization weighted index scheme. Under the weighting criteria, the maximum weight of a constituent cannot exceed 10% and the maximum weight of country cannot exceed 35%. The largest countries, in order by weight, are Saudi Arabia, Kuwait, Qatar, Morocco, and Egypt.

New York-based S&P Indices provides investable and benchmark indexes. The Arab Federation of Exchanges regulates, researches and develops the Arab financial markets

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