Dow Jones launches GCC Titans 40 index

Dow Jones Indexes, a leading global index provider, yesterday launched the Dow Jones GCC Titans 40 Index, which measures the performance of 40 component stocks traded in five of the six GCC states: Bahrain, Kuwait, Oman, Qatar and UAE.

The five countries included in the index are accessible to foreign investors.

The index has been licensed to Van Eck Global, a provider of global investment products, to serve as the basis for an exchange-traded fund (ETF). This is the first time that a pure GCC index has been licensed to underlie an ETF.

"The Dow Jones GCC Titans 40 Index is the next step in our efforts to build a family of GCC indexes. On July 1, we launched the first indexes in this series, the Dow Jones GCC and Dow Jones Islamic Market GCC indexes," Michael A Petronella, President, Dow Jones Indexes, said in a statement.

"As part of the Titans index family, this index represents the biggest and most liquid investable blue-chip stocks for the GCC region and facilitates investor participation in an important world market."

"The Gulf is one of the world's fastest growing and most sought after markets. The countries are seeking to diversify away from energy and to develop their financial markets," said Jan van Eck, Principal at Van Eck Global.

The Dow Jones GCC Titans 40 Index is weighted by float-adjusted market capitalisation. Weights of individual stocks are capped at eight per cent in each country, with a maximum of 15 companies per country without an additional cap on country weights. Stocks must have an average daily trading volume of $1 million (Dh3.67m) to be qualified for the index.

Eligible securities are ranked by float-adjusted market capitalisation, with the top three companies in each of the five countries being automatically selected as index components.

Additional components are selected top-down from the pool of all remaining companies until 40 components are reached. Back-tested estimated daily index history will be available back to December 31, 2003. The base value is set at 1,000 as of June 30, 2008.

The index is calculated in US dollars, and reviewed annually in June.

During quarterly reviews, float factors and shares are updated and eligible IPOs are added, replacing the smallest index components.