FTSE conducted the consultation as the group recognized that “it is imperative that a single standard to assess the market status of countries is identified and adopted by the investment community.” Overall, FTSE said t he initial consultation, conducted in December 2003, revealed widespread support for the proposal for a more transparent, objective and consistent approach when assigning countries as developed or emerging markets, according to a news release.
Even though changes to the index were not made FTSE provided a provisional “watch list” of possible changes to country classification with the FTSE Global Equity Index Series. The provisional “watch list” shows possible promotions and demotions between Developed and Emerging status and will be finalized in September 2004. In the meantime, FTSE will work with local exchanges to clarify the status of the exchanges and review again in September 2004. The Watch List will be published after the September meeting of the FTSE Equity Committee.
On the “watch list” was Korea and Taiwan to be advanced between the classifications of emerging and advanced. Additionally, the list presents China ‘A,” Cyprus, Iceland, Jordan, Saudi Arabia, Slovenia as candidates for entry to the FTSE Global Equity Index Series. FTSE notes that the World Index will continue in its current form and will be unaffected by any changes in the reclassification of Advanced Emerging countries.
To prepare investors for the transition to the inclusion of changes to the FTSE Global Equity Series, the group also unveiled new shadow indices proposed to be introduced in March 2005. These include:
- China, Mainland (A,B,H & Red Chips),
- China Mainland ex A shares,
- China (Hong Kong & Mainland),
- China ex A shares (Hong Kong+ Mainland ex A shares),
- Greater China (Hong Kong + Mainland + Taiwan),
- Asia Pacific ex Japan (including A shares),
- Global Developed Markets (including Korea & Taiwan),
- Global Emerging Markets (excluding Korea & Taiwan).
More information is available at www.ftse.com/country.