Solactive has created an index that will track the performance of companies benefitting from China’s Belt and Road Initiative (BRI).
The Solactive Belt and Road index concept will benefit from the Belt and Road corridor economies and their increasing relevance within global financial markets.
Solactive is ready to make the index live as soon as an ETF issuer licenses the index concept.
The index includes companies identified by the World Bank that will benefit from the effects the BRI could have across its 71 corridor economies.
In October 2013, Chinese President Xi Jinping revealed plans to launch the BRI, which is set to link countries from China to Europe on land and Southeast Asia, the Gulf, Eastern and Northern Africa and Europe by sea.
According to academic research, the BRI connects countries with over 4 billion inhabitants and more than a third of the world’s total GDP with projects totalling over $1trn over the next decade.
To be included in the index, constituents must be among the top 100 companies relative to their geographic revenue diversification, as measured by the Herfindahl-Hirschman Index (HHI).
The top three countries in the index are Japan, which makes-up 27% while the US and Singapore account for 18.4% and 13.5%, respectively, as at October.
Rebalanced annually, the index excludes China A-Shares.
ESMA registers Solactive as benchmark administrator under BMR
Axel Haus (pictured), head of qualitative research at Solactive, commented: “China is reviving the historic Silk Road and stock investors, can benefit from the project’s long-term exciting developments ahead.
“Given the ever-growing importance BRI’s corridor economies will have in the shaping of society within the foreseeable future, companies that broadly service their markets should be at the centre of investors’ attention.”